Groupon: Expect a sizable IPO

Deal of the day- Groupon files IPO, looks to raise $750M – RCR Unplugged

“The firm also raised more than $1B in venture capital, but is not actually profitable in its current state.”

How can Groupon possibly not be profitable, considering how much money they pull in?

Consider what $1B can acquire (rough estimates):

  • 15 thousand employees
  • 250 thousand servers
  • 50 billion SMSs or e-mails
  • or 200 million Big Macs

What’s wrong with the picture?

If the money mainly goes to marketing I understand it could cost anything, but that’s because brokers overcharge. Just look at Facebook ads that easily can cost $1 per click (first hand experience). That’s simply insane.