Groupon Could Raise IPO Pricing By Using Supply Tactics

Social buying company Groupon Inc. may increase the initial asking price for their IPO after higher-than-expected demand for the company’s shares have been requested by investors.

Part of the company’s high demand comes after they announced plans to float just 4.7 percent of their shares, a stunt meant to increase share prices by placing constraints on supply.

If the company sticks to their plans for a 4.7 percent offering it will be the lowest number of shares sold by any U.S. Internet company of more than $200 million since 2000. Typically an IPO will offer 20 to 25 percent of a company’s shares to investors

The initial public offering is currently being shown to investors and the company hopes to complete the offering on November 3.

Speaking to Bloomberg Brett Harriss, an analyst at Gabelli & Co. in Rye said:

“I’m sure that it’s going to be fully subscribed,” while also noting, “It’s a thin stock to start and, despite the recent criticism, they tell a good story.”

According to an Oct. 21 regulatory filing Groupon is seeking up to $540 million through the sale of 30 million shares at an expected cost of $16 to $18 per share.

This is one stock I’ll be avoiding with all my will power. Do you believe that Groupon is overvalued or worth the investment?