Following in the footsteps of the massive LinkedIn IPO, Groupon (news, site) heads for the markets, but people have questions.

Going Forward Not So Straightforward

Groupon's success as a social media darling and leading deal-maker for users isn't in question. The company yesterday filed for an IPO in the area of US$ 750 million. But people are asking about several aspects of the company. For example, Shira Ovide of the Wall Street Journal points out that, while revenue is up over 2,200%, operating expenses are up over 5,700% which is a lot, and the company's hiring page suggests vast expansion is continuing.

Still, Groupon is a fast grower, with total revenue for 2010 of US$ 713 million, almost matched by 1Q11's revenue of nearly $645 million, but it is still yet to turn a profit. But, where there are excited investors, there are those willing to gamble -- either on a quick day-one rocket to profit or a long-term investment.

But, even after a successful IPO, the company concerned doesn't generate as much money as you might think. Will the proceeds be enough to fund the expansion that will see revenue match or exceed costs? Also, while LinkedIn has its neat little niche, Groupon is in a fiercely competitive market with several other players and the likes of Google (with its smart new Wallet)  and Facebook taking a keen interest.

Bubble or No Bubble?

Outside of Groupon's control is the raucous debate about whether we are in a tech boom and bubble just like the first era. Only history will tell us that, but Groupon, which has a proven revenue stream, no matter how volatile, is not really the company to point the stick at.

Other issues to be decided are whether the company will appear on the NYSE or NASDAQ, which is a different battle between the bourses. Another detail is how much the bankers behind the deal skim off for themselves, an issue that is becoming increasingly tetchy in light of the "bad banks" performance in recent years.

All of these issues probably won't stop Groupon from having a good day on its stock opening, but in the long term, lots of executives will have to answer to the raw evidence of the balance sheet. And it might not make pretty reading.