roupon is fast becoming one of the most explosive startups in tech history. The online coupon vendor recently spurned a $6 billion takeover offer from Google, and now it is reportedly talking with Goldman Sachs about a possible initial public offering of stock valuing the company at $25 billion — higher than Google was priced in its 2004 IPO. Groupon's rapid success has sparked an explosion of competitors, including LivingSocial. Is Groupon, which was only launched in 2008, really worth that much? (Watch a Bloomberg discussion about Groupon's value)
It very well could be: Groupon has dominated the daily-deal market, which is one of the hottest new businesses going, says Howard Wolinsky at Appolicious. It's already the "fastest-growing company in history," and that's before it launches its latest innovation — an app that offers smartphone users instant restaurant or activity deals by clicking either "I'm hungry" or "I'm bored." As one analyst says, this could keep Groupon a step ahead of its copycats, and change the way we spend, forever.
"Groupon mobile app pushing smart buttons, may have $25 billion IPO in offing"
This could be evidence of a bubble: "What's going on here?" asks Erick Schonfeld at TechCrunch. "Dare I say the 'b' word?" Groupon appears "wildly profitable" right now, but it's still new. It's too early to know whether the bargain hunters it's driving to local businesses will ever return to pay full price. If it doesn't, it will be tough for Groupon to "sustain its 50 percent revenue split with merchants," and its profits.
"Is Groupon worth $25 billion? Revenue now 'multiple billions of dollars'"
It's too early to judge Groupon: No one can yet pin an accurate dollar value on Groupon, say the editors of The Economist. It is a hot property now, but some day its trend-setting customers are bound to get "Groupon fatigue" and move on. That doesn't necessarily "mean that Groupon will go the way of Napster, Friendster, or MySpace, all of which had meteoric rises before crashing and burning." It might. But it also might dominate, like Amazon. Only time will tell.
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Who are the real gay marriage bigots?
- What would a U.S.-Russia war look like?
- Sorry Belle Knox, porn still oppresses women
- What the collapse of the Ming Dynasty can tell us about American decline
- Watch The Daily Show mock Fox News' confused man-crush on Vladimir Putin
- Religious liberty should be a liberal value, too
- Why is American internet so slow?
- Don't worry: World War III will almost certainly never happen
- 22 TV shows to watch in 2014
- The Daily Show's Aasif Mandvi dismantles another ObamaCare myth
Subscribe to the Week