CHICAGO (TheStreet) -- Despite rising chatter that Groupon could price its IPO above its expected range, one expert says sell the daily deals site's shares at the open.
"It's an extremely risky IPO that I feel should be flipped on day one -- sell it at the opening," explained Scott Sweet, senior managing partner at IPO Boutique.
Flipping involves buying shares at the offering price and selling them on market open. "This is a tactic some underwriter players choose on certain IPOs to lock in profit," explained Sweet.The analyst also voiced his broader concerns about Groupon. "There are 570 Internet-based coupon companies and 1,000 non-Internet ones [plus] Groupon has 10,000 employees, which is four times that of Facebook -- talk about too much SG&A." "You're looking at a wild card," he added. "There are zero barriers to entry [in this market and] no patents needed." Groupon, which scaled back the size of its IPO earlier this year, has also come under fire for its accounting metrics and the way the firm has handled its offering. Nonetheless, the company's debut could rekindle interest in the IPO market. There is also talk that Groupon could price its offering above its anticipated range of $16 to $18 a share. Citing three buyside sources, Reuters reports that Groupon could price its IPO $1 to $2 above its current range. The daily deals site is expected to price its offering later on Thursday, and start trading on Friday. Groupon has not yet responded to TheStreet's request for comment, although Sweet believes that the firm will price higher than expected. "It's my hunch that they will price at $19," he said, adding that the IPO is "many, many times" oversubscribed. Assuming the midpoint of Groupon's $16 to $18 offering price, the company would be valued at $10.7 billion, although a $19 price would value the firm at $12.02 billion. Another recent entrant to the public markets, LinkedIn (LNKD), reports its third-quarter results after market close on Thursday. --Written by James Rogers in New York. >To follow the writer on Twitter, go to http://twitter.com/jamesjrogers. >To submit a news tip, send an email to: firstname.lastname@example.org.
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