I’m torn on Groupon’s reported IPO late in 2011 or early 2012 – especially now that it’s looking like Facebook could IPO in 2011, too. Of the two, my money would be on Facebook, but I’d seriously consider laying down some cash on a Groupon IPO. Here are five reasons why:
1) Groupon shot down buyout bids of $2 billion (from Yahoo!) and $6 billion (from Google) this year alone. That haughtiness shows that Groupon’s leadership knows they’ve tapped into a very special market with lots of room for growth.
2) Groupon’s expects sales of more than $500 million this year, according to Bloomberg. Not bad for a company that’s barely two years old!
3) Groupon has more than 35 million registered users, and they’re users who are in the habit of spending money at local restaurants and businesses. As that database of users grows, so too will Groupon’s ability to target ads to specific users and types of users based on their past buying habits.
4) Groupon’s valuation estimates have shot up more than 400 percent since April. That type of growth just doesn’t come around often. As the business expands into new domestic markets and around the globe, Groupon should be able to keep generating fresh sales even as companies like Twitter struggle to find viable revenue options.
5) Groupon produces results for local business owners – at least according to Groupon. Groupon claims that 90 percent of their “featured” local businesses ask to be featured a second time on the site. The best part of the model is that small business owners don’t have to shell out a penny up front. They make money when Groupon sells coupons. It’s a hard model to resist, even if Groupon keeps the bulk of the cash from the coupon sale.