Tuesday, November 21st, 2017

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Groupon Announces IPO As Fears of Tech Bubble Rise

Groupon announced plans to conduct its IPO soon.A slew of web companies have conducted their IPOs recently, and a growing number of investors can’t help but recall the dot-com bubble burst more than a decade ago. The Wall Street Journal reports that deal-of-the-day site Groupon has decided to follow the trend, announcing its IPO on Thursday June 2, which might not ease many worries.

Only last year, Forbes referred to Groupon as the fastest growing internet company in history, and that came before the company ultimately posted $713.4 million in 2010. That represents more than 2300 percent growth from its 2009 revenue of $30.47 million. In addition, the website has already pulled in $644.7 million in the first quarter of this year.

The primary problem with the company, however, remains that it has never turned a profit, despite its fantastic growth. Last year it lost $389.6 million and executives have explained that it antiticipates continued losses as the company aims primarily for long-term expansion. Wired reports that the company raised nearly $1 billion recently, but looks to its IPO for funds to expand because nearly all of that money went to early investors.

Wired also raised questions about a tech bubble when professional networking site LinkedIn conducted its IPO last month. However a few aspects distinguish that site from Groupon including five more years of operation and, most importantly, its first reported profit in 2010.

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