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What a comedown! Groupon IPO target slashed by billions

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By Noel Young, Correspondent

October 20, 2011 | 3 min read

Daily deals company Groupon is scaling back plans for its public offering. The Chicago company is now looking for a deal that values it at less than $12 billion. The IPO was originally expected to value the three-year-old company at between $15 billion and $20 billion.

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The Wall Street Journal said it was " a stark comedown for what was expected to be one of the hottest stock offerings of the year."

The $12 billion figure would " still mark one of the biggest Internet IPOs since Google Inc. in 2004," said the Journal. But it is well below the valuations bandied about when the company filed to go public in June.

The reasons for the slippage are given as recent market volatility as well as several missteps by the company,according to insiders.

Groupon's accounting is being gone over by regulators and the company was forced last month to change the way it books revenue.

Groupon reportedly plans to conduct its road show for investors starting either next Monday or Tuesday. The size of the stock sale could be $500 million to $700 million. The smaller offering - well under 10% of the company's outstanding shares - is meant to cut the amount of stock being sold, "in hopes that more shares can be sold later at higher prices," people familiar with the situation told the WSJ.

The paper said there had also been "intense speculation" from investors over Groupon's business model.

In September, the company cut its reported revenue in half to satisfy questions from the Securities and Exchange Commission. Its chief operating officer also left last month.

When it filed to go public in June, Bloomberg described the enthusiasm as being "reminiscent of the Web stock craze of the late 1990s. The young company's confidence in its future had been on display six months earlier, when it rebuffed a $6 billion offer to be acquired by Google."

Groupon faces hundreds of competitors, local, national and international. It has fought back through aggressive marketing and by expanding quickly to markets around the world.

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