Groupon's initial public offering (IPO) is expected to be much lower than originally anticipated earlier this year. Analysts now believe the company will be valued between $5 billion and $10 billion when shares are offered on the open market, according to a new report from the Wall Street Journal.
The WSJ spoke with two major mutual fund firms, Growth Fund of America and T. Rowe Price, about Groupon's IPO. Growth Fund of America currently values the daily deals provider at $9.5 billion while T. Rowe Price offers a more conservative $8.7 billion value.
Earlier this year Groupon had an estimated valuation between $20 billion and $25 billion, but multiple issues have since lowered that value significantly. In August, Groupon was forced to amend their S-1 public offering filing to correct what was called unusual accounting practices. The Securities and Exchange Commission said the company had reported higher revenue than it should have. CNET says Groupon reported $713.4 million in revenue for 2010 but that number should have been $312.9 million, according to the SEC.
In addition to issues with the SEC, Groupon is just one of many companies experiencing uncertainty due to a volatile stock market. Company executives would like to get the most per share but jumping in when the market isn't stable could be a bad idea.
If all of this sounds vaguely familiar, it should. Social gaming developer Zynga is essentially going through the exact same thing right now. Zynga was cited by the SEC for using non-traditional accounting practices in their filing. We later learned that company heads were also planning to go public much later than initially planned due to uncertain market conditions.