The Groupon IPO is a highly anticipated event. According to Forbes, Groupon is the fastest growing company in history with 83 million subscribers across 43 countries. So what does this mean for the IPO?
In order to keep pace with growth, the IPO is set to raise $750 million. While the actual date of the IPO is unknown, analysts have speculated about the date for some time.
Groupon IPO Growth Strategy
Everyone wants a piece of the fastest growing company in history--but will they be able to sustain that growth? Eric Lefkofsky, Groupon's biggest shareholder, Chairman, and co-founder attributes the growth to a dynamic growth strategy and a subscriber based business model. A business is defined by its business model and in the second quarter of 2010 Groupon truly defined itself by generating $61.7 million in gross profit off of $18.0 million in marketing costs. That's a 70 percent ROI. Investors are counting on this growth strategy with the coming Groupon IPO, but will the company be able to continue this level of profitability and growth or will the Groupon IPO be a bust for investors down the road?
Groupon IPO Growth Strategies
The key to Groupon's success has been its rate of growth and company management has no plan for altering the current success model.
In the Groupon IPO filing to the SEC, management cites four distinct strategies the company uses to keep growth at record levels. The company plans on growing the subscriber base by growing the number of merchants featured with deals in the Groupon marketplace, and the number and variety of products offered through research and new product innovation. The company has also proven to be successful at finding synergies through acquisitions as it has made 13 acquisitions since May 2010. Prospective investors are hoping the $750 million IPO valuation is based on these solid growth strategies and not market hype.