2014 has been a productive year for Initial Public Offerings (IPOs). The latest one being Coupons.com (COUP), whose shares surged 87.5% ($14.00) to $30.00 on Mar 7, 2014. Originally priced at $16.00, the digital coupons provider sold 10.5 million shares and fetched $168.0 million in its IPO.
Earlier, Coupons.com received $277.0 million in venture financing, with the bulk of it coming from Passport Capital. Passport Capital has a 20.0% stake in Coupons.com and T. Rowe Price has a 10% stake. The offering was led by Goldman Sachs (GS), while Allen & Co., Bank of America and RBC Capital Markets served as underwriters.
Coupons.com partners more than 700 consumer-packaged goods companies, which use the website to market approximately 2000 brands. Coupons.com earns fees from these partners when a customer selects and prints/save one of their coupons. The company also earns a fee when customers purchase goods using the coupon codes.
The surge in Coupons.com share price is quite surprising. Although the company’s revenues continue to grow, it has reported loss for the period of 2011, 2012 and 2013. The company has accumulated deficit of $168.0 million, which is equivalent to the amount it raised from the market.
Coupons.com’s overall transaction increased from 345 million in 2009 to 1.3 billion in 2013. The company reported revenues of $167.9 million and net loss of $11.2 million. The company spent $61.8 million on sales & marketing and $40.0 million on research & development. In the fourth quarter, the company reported revenues of $52.6 million and profit of $1.5 million.
We believe Coupons.com has a tough task in hand as the competition intensifies from RetailMeNot (SALE) and daily deals provider Groupon (GRPN). Year-to-date, RetailMeNot shares are up 53.5%, but Groupon shares are down 27.4%. If the Coupon.com shares can continue to post strong returns, it will be one of the best U.S. IPOs in 2014.
Currently, RetailMeNot has a Zacks Rank #3 (Hold), while Groupon has a Zacks Rank #4 (Sell).
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