The dust has settled a week after Groupon\u2019s IPO last Friday. Here\u2019s a quick Q&A on the offering.<\/p>\n
How much did Groupon raise?<\/strong><\/p>\n $700 million. It was the largest IPO by a U.S. Internet company since Google Inc. raised $1.7 billion in 2004, according to Reuters<\/a>. Groupon is now trading on the NASDAQ under the ticker GRPN.<\/p>\n All that sniping about accounting and the company\u2019s business model?<\/strong><\/p>\n It\u2019s history. At least for now. The company\u2019s float was only a little more than 5% of the company, which means the firm is now valued at $13 billion. Shares rose to $20, above an initial range of $16 to $18, and by the end of this week were trading around $24.<\/p>\n But the company faces deep-pocketed competition and restive merchants, as this Marketwatch report on Groupon\u2019s practice of paying merchants slowly<\/a> shows.<\/p>\n Who made out?<\/strong><\/p>\n The Groupon (paper) millionaires and billionaires list, including founders and early investors, via The Wall Street Journal<\/a><\/em>:<\/p>\n How long should you hold on to your stock? Should you invest now?<\/strong><\/p>\n BusinessWeek <\/em>did an analysis of IPOs in 2010\/2011<\/a> and found that after the initial \u201cpop,\u201d 20 of the 25 fell.<\/p>\n Carl Richards of The<\/em> New York Times <\/em>had this to say in his column<\/a>:<\/p>\n “Normally when you invest money, you actually need it for rather important things like sending your children to college. So you do at least a little research. IPOs in general are hard to research, and Groupon has been no exception. You have the chief executive, Andrew Mason, saying things like, \u201cWith a market measured not in billions but in trillions of dollars, we\u2019re just getting started. And on the other hand, you have a new company in an industry it almost invented, with no profits. Sounds like a tossup to me.<\/p>\n There is nothing wrong with using money to gamble on a tossup. Who knows, you may be right. Just do everyone a favor and stop pretending that it\u2019s an investment. It\u2019s a lottery.\u201d<\/p>\n This blog post<\/a> looks more specifically at the performance of tech IPOs, and here\u2019s our post that offers a great background on understanding tech IPOs<\/a>.<\/p>\n \u201cThe popular perception of the IPO process is that in the first phase, lucky insiders suddenly become millionaires, and that anyone buying shares during the second phase is \u201clate to the party,\u201d and might be left \u201cholding the bag.\u201d As with most perceptions, this is partly true but mostly false,\u201d writes Barry Randall in the post.<\/p>\n What about employees who own shares?<\/strong><\/p>\n Business Insider<\/em> reported<\/a> that employees are not permitted to sell their shares for 180 days post IPO. Apparently, there was some confusion about the issue.<\/p>\n \u201cIt would have been pretty weird if Groupon employees had been able to sell on day one,\u201d wrote Business Insider<\/em>. \u201cThe banks that underwrite IPOs almost always forbid this. They don’t want everyone dumping the stock the moment they can, and hurting investors buying into the company on the IPO.\u201d<\/p>\n \u201cOn the other hand, it’s got to be pretty frustrating for Groupon employees to be jerked around like that.\u201d<\/p>\n What does Groupon\u2019s IPO mean for the IPO market?<\/p>\n The <\/em>Wall Street Journal <\/em>reported<\/a> on the champagne at Groupon headquarters and noted that:<\/p>\n \u201cSilicon Valley and Wall Street took Groupon’s stock market debut as a sign that investors are still willing to make risky bets on fast-growing but unprofitable young Internet companies, even as the initial-public-offering environment has shifted over the past few months due to stock market volatility. Groupon’s IPO in particular is viewed as setting the tone for other highly anticipated tech IPOs like Zynga Inc. and Facebook Inc.\u201d<\/p>\n One small Silicon Valley company, Imperva<\/a>, has already ridden the IPO wave, issuing five million shares of stock on Wednesday to raise $90 million<\/a>. The stock was trading at about $25 at the end of the week, up from its IPO price of $18.<\/p>\n All eyes turned to Zynga, which reports said would schedule its IPO for after the holidays. Late in the week, The Wall Street Journal<\/em>, citing unnamed sources, said that Zynga CEO Mark Pincus had asked some employees to give back pre-IPO shares.<\/a><\/p>\n The Wall Street Journal<\/em> further stated that Pincus, who gave out stock freely to keep top talent early on, developed \u201cgiver\u2019s remorse\u201d and that some of those early recipients of stock did not contribute as much to the company as later employees who got fewer shares.<\/p>\n Reuters reported that asking<\/a> for give-backs is not uncommon, and quoted Lynne C. Hermle, a Silicon Valley employment lawyer. Ms. Hermle, who does not represent Zynga, said the practice happens at other companies, too.<\/p>\n \u201cI have not seen it publicized but it does happen,\u201d she said, citing attorney-client privilege for not naming the companies. \u201cSometimes it\u2019s a negotiation and sometimes it\u2019s a fight.\u201d<\/p>\n The Financial Times<\/em> said the move challenged the traditional pay structure of Silicon Valley<\/a>, which has rewarded early employees of startups with lottery-like winnings.<\/p>\n For another sign of the decline of Wall Street, contrast the situation surrounding the Groupon IPO and the champagne flowing through Silicon Valley (even though Groupon is headquartered in Chicago) with the dour mood descending over New York.<\/p>\n The MF Global bankruptcy continues to unwind, casting ever-more-doubt on the success any regulator could have reigning in the excesses of the Street, given the culture of secrecy that thrives there. (See our post on Why Investors Should Care About MF Global<\/a>).<\/p>\n Bonuses on Wall Street are dropping.<\/p>\n \u201cJohnson Associates, a Wall Street compensation expert, is out today with its projection that bonuses on the Street this year will drop by as much as 45% in some units, says Halah Touryalai of Forbes<\/a>.<\/p>\n\n
Zynga Storm<\/h2>\n
The sun shines in California. Not so much in NY.<\/h2>\n