Venture capitalist John Doerr has said that Zynga was his firm’s fastest-growing investment ever. And Doerr should know growth. Over his long tenure at Kleiner Perkins, he helped fund everything from Amazon to Google. The firm has not funded Groupon.
"While local deal industry and Groupon specific statistics are minimal, Groupon is clearly the leader in the rapidly growing new e-commerce space of local deals," said Wedbush’s Kerner in a note. "Groupon is reportedly tracking to exceed $500 million in revenue in 2010, and remains on a torrid growth curve in terms of audience growth."
Despite the company’s mind-blowing growth, shares of its potential buyer have been hit this week on concern it may overpay for the local advertising and social network mash-up. Yesterday’s report from the New York Times said Google has offered to pay $6 billion for Groupon, a higher amount than initial reports.
Google’s stock rebounded today as some analysts and investors bet the acquisition would put the company immediately in a business where it and others have failed.
"Groupon would help Google gain traction within social commerce, a high growth area for advertisers," said Jefferies analyst Youssef Squali, who estimates Groupon’s annual revenue at $600 million. "A $6 billion price tag would put the deal at roughly 10 times revenue, a steep multiple but roughly in line with what Google paid for YouTube and Doubleclick in 2006 and 2007."
In an interesting twist, it’s Groupon’s rapid growth that scares some investors of paying that much for a social network. Gone are the days where tech companies are started up in a garage. With the barrier of entry just a keyboard, perhaps a better coupon competitor will come along for a cheaper price….any minute now.
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John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team.