CHICAGO — Shares soared Friday in Groupon’s debut as a publicly traded company, capping a controversial initial-public-offering process underscored by intense criticism from analysts and experts about the company’s viability.
Groupon shares opened trading at $28 — up 40 percent from the IPO price of $20. The stock briefly touched the $31 mark after it opened but soon slipped back. Groupon shares closed at $26.11, up 31 percent.
Late Thursday, the Chicago-based company priced its 35 million shares — an extra five million were added to the planned offering size to meet demand — at $20, above the indicated range of $16 to $18.
Nick Einhorn, an analyst with Renaissance Capital, said Groupon’s raising the number of shares in the IPO, its pricing above the forecast range and the stock’s gains at the open “showed that there was a lot of demand for the stock, despite the many risks.”
Groupon is seen as a part of a new wave of internet IPOs, including a number of companies tied to the fast-growing social-networking category.
In fact, the company’s offering, which looks to have raised at least $700 million, was the biggest IPO by a US internet software or services company that’s currently operating since 2004, when Google Inc. raised $1.7 billion in its IPO, according to data from S&P Capital IQ.
But Friday’s debut followed a rocky pre-IPO process in which its CEO drew fire for leaked comments on the company. Groupon’s prospects also reeled as analysts and experts raised serious doubts about its management team and the viability of its business model.
In the leaked email from August, which appeared to violate Securities and Exchange Commission’s quiet-period rule, Mason boasted that Groupon was “catalyzing millions of dollars of local commerce every single day.”
Groupon’s IPO appeared to face more imposing hurdles as experts and observers expressed uncertainty about its business model.
Many still believe that early investors will sell the stock at their first opportunity. The offering encompassed only 5.5 percent of Groupon’s total shares outstanding, which may have had the effect of boosting demand through scarcity.
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