Groupon (NASDAQ:GRPN) is a group buying site which allows merchants to sell deals or discounted offers on their goods or services. The merchant can require that a minimum number of customers must purchase the deal before it becomes valid, or the merchant may limit the number of deals that can be sold. Individuals can subscribe to Groupon, and they receive targeted deals based on their location. Groupon makes money by charging customers for each offer, but the company pays merchants a negotiated percentage of each sale.
For the full year 2010, Groupon's total revenue was $312.9M. This was substantial increase over the total revenue of $14.5M in 2009. The company had not achieved a net income however, as of 2010. In 2009, its net loss was $1.3M and in 2010 it was $413.4M. The largest cost the company incurred in 2010 was marketing, which was $290.6M in 2010.  This $20 IPO placed the value of the company at $12.7B.
The company's initial public offering of stock on the NASDAQ occurred on November 3, 2011. The company offered 35M shares each for $20. This was above the $16-$18 price range. The company sold 35M shares. This deal raised $7B. The lead bookrunners of the deal were Morgan Stanley, Goldman, and Credit Suisse.
Groupon's marketing in 2010 was nearly as large as its total revenue. The company uses marketing to encourage individual to subscribe to Groupon and to purchase live offers. Groupon believes that while it has faced a high marketing costs, such costs will be lower in the future as the company will have created a customer base. However, if such costs remain elevated, Groupon's profits will be directly lowered.
While Groupon is a large player in the daily-deal market, the market is very competitive. Groupon does not have any significant way to differentiate itself aside from the type of offers and the level of the discount. This means that defending its market share is relatively hard.