Net darling Groupon soars on shares debut

Groupon, the company that pioneered online group discounts, saw its stock climb by nearly a third in its public debut yesterday, showing strong demand for an internet company whose business model is considered unsustainable by some analysts.

Groupon’s stock jumped $6.40, or 32 per cent, to $26.40 in late morning after trading began. Earlier, the stock was trading as high as $31.14. Big fluctuations are common for companies that have just gone public as investors gauge what to do with the stock.

Chicago-based Groupon sends out frequent e-mails to subscribers offering a chance to buy discount deals for anything from laser hair removal to weekend getaways. The company takes a cut of what people pay and gives the rest to the merchant.

Groupon is selling 5.5 per cent of its available shares. Though not unprecedented, the amount is below that of many prominent tech companies, such as Google and more recently LinkedIn, in recent years.

On Thursday, the company priced its IPO at $20 per share. That was above its expected range of $16 to $18. It gave Groupon a market value of $12.7 billion, below only Google’s among tech companies.

Another internet darling, professional networking service LinkedIn, saw its stock soar to $122.70 on its opening day in May after pricing at $45. Since then, the shares have settled lower but were still trading at $80 yesterday.