AP Technology Writer
POSTED: 05:50 a.m. HST, Nov 04, 2011
LAST UPDATED: 05:57 a.m. HST, Nov 04, 2011
NEW YORK>> Groupon, the company that pioneered online group discounts, saw its stock soar nearly 50 percent in its public debut Friday, showing strong demand for an Internet company whose business model is considered unsustainable by some analysts.
Groupon's stock jumped $9.52 to $29.52 in late morning Friday after trading began at about 10:45 a.m.
Chicago-based Groupon Inc. sends out frequent emails 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.
Though it's spawned many copycats after its 2008 launch, Groupon has the advantage of being first. This has meant brand recognition and investor demand, as evidenced by its sizzling public debut.
Groupon is selling 5.5 percent of its available shares. Though not unprecedented, the amount is below that of many prominent tech companies, such as Google Inc. and more recently LinkedIn Corp., 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, above only Google's among tech companies. With Friday's stock price jump, Groupon's value rose to $18.75 billion.
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 stock has settled lower but was still trading at $80 late Friday morning.
Groupon's shares rose amid a decline in the broader market. The Dow Jones industrial average was down 183.91, or 1.5 percent, to 11,860.56.