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Groupon to move into social media

November 28, 2011

Online voucher giant Groupon has announced its plans to create a social network despite falling share values, according to a news report.

groupon%20logo.jpg
The Daily Telegraph reports that Groupon wants to venture into social media marketing by creating its own network for premium subscribers.
The so-called Groupon Reserve is currently in the testing phase in New York, offering more high-end deals to some of its wealthiest users.
When it is eventually rolled out, the scheme is expected to be slightly less exclusive than its current incarnation, although it will target “well-travelled, well-educated individuals” and is planning to operate on an invite-only basis.
Groupon would be wise to look at Google when creating its new social site, with the search giant billing Google+ as a Facebook killer but something that, eventually, just floundered.
“You can start to see, directionally, where the company is trying to differentiate itself from [rivals like] LivingSocial,” a spokesperson told telegraph.co.uk. “Groupon Reserve is in the pilot phase but [we want it to be like] Asmallworld.”
Shares fall
Despite the new feature, Groupon announced a fall in share value, although this is expected to be a short term decline.
Groupon went public on November 4. Shares in the daily deals company rose on the first day of trading by around 50 percent on its launch price of $20 per share, though it soon settled at around $26. Last week, however, Groupon’s share value has tumbled, and on Wednesday fell 16 percent to $16.96 per share, taking it below the launch price for the first time.
Groupon raised $700 million in its IPO, impressive for a company that only started doing business in 2008. Indeed, it was the largest IPO by an American Internet company since Google raised $1.7 billion back in 2004.
Speaking to the New York Times about Groupon’s share price drop, Paul Bard, a director of an IPO advisory firm, said, “In the environment we’re in right now, investors are wary of risk, and so these less-seasoned companies will naturally face more selling pressure.”
Fears of increased competition from rivals such as Amazon-backed LivingSocial and Google Offers has also caused some investors to offload their shares, said a Reuters report. The cut-throat daily deals business has already reached saturation point, with many rival companies going out of business in recent months.
The sharp fall in Groupon’s share value will certainly be a matter of serious concern for other technology companies – Facebook and Zynga among them – which are considering an IPO in the near future. A report a couple of months back suggested Facebook would wait until late 2012 before going public – looking at the way things are going for Groupon just now, holding on until a later date like that will probably be the route many technology companies will decide to take.

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