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The start-up scene in Silicon Valley may also see a boost. Zynga, which recently raised funds at a $10 billion valuation, has not had as many public stumbles and is expected to be embraced by investors.

GROUPON USHER TICKETS PROFESSIONAL

While shares of LinkedIn have pulled back since their debut, the professional social networking site is valued at $8 billion. The successes of Groupon and other newly public Internet companies could be a good omen for the sector. In the end, demand was so high that orders were more than 10 times the amount of the shares offered. The underwriters, following the lead of companies like LinkedIn and Pandora, also kept the offering small, at little more than 5 percent of the total shares. Some investors expressed interest in paying more than $20 a share, but the bankers wanted to give some space, instead of 'pricing to the last available dollar,' one of the people said. The company's underwriters tried to give more allocations to established mutual funds, known for buying and holding, instead of less predictable hedge funds suspected of seeking a quick buck, according to two people with knowledge of the matter who were not authorized to discuss the matter publicly. After deep conversations with some of the largest potential buyers, the underwriters tested a higher price, above the initial target of $16 to $18 a share. Almost immediately, investors started to place orders, several people said. The market was less than ideal and the press was far from glowing, but the plan was to pursue a smaller offering, in size and in price, that would allow the company to go public and put all the related distractions behind it.Ĭonfidence started to build in October, as the management team and its underwriters began a two-week road show across the country. It did not help that the Internet company was also working through accounting issues with regulators who frowned on how Groupon was representing its revenue.Īs September dragged on, the underwriters encouraged the company to push ahead with an offering, despite the turmoil. advisory firm.īut the enthusiasm, which seemed to reach a fever pitch earlier this summer, started to cool in August amid volatility in the equity markets and macroeconomic fears.Īt that point, Groupon's bankers, lead by Morgan Stanley, Goldman Sachs and Credit Suisse, cut their estimates for pricing, according to one person with direct knowledge of the matter who was not permitted to talk about the offering publicly.

Technology offerings have accounted for about a third of all offerings this year, according to data from Renaissance Capital, an I.P.O. In the first half of this year, the technology sector propped up the larger I.P.O. Investors of all sorts eager to own a piece of the next great thing plowed millions into the new generation of start-ups, flooding the markets with capital and bidding up prices across the board.Īgainst that backdrop, a rush of technology companies went public, like Yandex, a Russian search engine, and Pandora, the online music service. The group's ascent over the last two years set off a broader buying frenzy in Silicon Valley. Groupon, like LinkedIn and Zynga, is part of an elite cadre of start-ups that swiftly soared to multibillion-dollar valuations, capitalizing on the growth of online social networks.

'This will be popular for short-term traders.' Schuster, who decided not to buy Groupon shares on Friday. 'The risk is to the downside from here,' said Mr. Analysts are still skeptical that Groupon's fundamentals justify the market value - a fear that echoed the dot-com boom in the late 1990s. The question is whether Groupon will be able to move higher from here.

Duda noted, he did not invest in Groupon. 'If you're Zynga's founder, Mark Pincus, you're probably doing back flips.' Still, Mr. 'People were looking for reasons to be optimistic, well, they found it,' said Michael Duda, a venture capitalist at Consigliere, a consumer investment firm. LinkedIn, which had a successful debut in May, with shares more than doubling on the first day of trading, announced that it was planning to offer up to $500 million in additional shares. Some newly public companies are already re-upping.

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