It’s now official: The once fast-growing Groupon engine is losing steam.
The No. 1 daily deals site yesterday finally put a price range on its long-anticipated initial public offering, saying in a regulatory filing that it hoped to raise up to $621 million by selling 34.5 million shares in the Chicago company for between $16 and $18 a share.
That would value the company at about $11.5 billion, a far cry from the $30 billion valuation and the $750 million the company was expecting to fetch when it first ogled the public markets in June.
Since then, the company founded by Andrew Mason and Eric Lefkofsky has suffered from some self-inflicted wounds, a downturn in the markets and a throttling down of its growth engine.
It had to amend its financials a number of times to appease the Securities and Exchange Commission, and company executives, including Mason and Lefkofsky, have run afoul of the “quiet period” mandated ahead of a public offering.
Perhaps the biggest blow to its valuation came when Groupon had to cut by more than half the number it reports as its revenue, because the SEC wanted it only to account for the money the company takes from Groupons sold, not the combined total before it shares proceeds with merchants.
It didn’t help when Groupon revealed in regulatory filings that the number of deals sold in its most mature market, Chicago, have started to decline.
Despite all the turbulence, even critics who consider the current valuation too lofty said the company will likely see a big pop on its first day of trading — because of a smart IPO engineering decision by underwriters Morgan Stanley, Goldman Sachs and Credit Suisse.
Groupon is selling only 5 percent of the company and the scarce supply of shares increases the odds that demand will push the price up.
The company expects to set its IPO share price by Nov. 3 and go public on the Nasdaq the next day.
“Investors have shown a classic pattern for stocks of this kind of notoriety by thumbing their noses at valuations and saying we know better,” said David Menlow of IPO Financial.
The stock could still rise 50 percent when Groupon sets the official price, and from there it could pop two or three times from its opening trade, he said.
“It’s going to be: Katie, bar the door,” Menlow said.
Not everyone is bullish. Sam Hamadeh, an analyst with PrivCo.com, issued a report yesterday that said Groupon should be worth about $8 a share and does not deserve the multiple it is getting.
Hamadeh challenged the notion that Groupon is a high-growth company by pointing to third-quarter numbers the company released yesterday.
While its revenue topped $430 million last quarter, up from about $82 million year over year, quarterly growth has been steadily declining and hit single digits — up just 9.5 percent compared to last year — for the first time.