Group coupon website Groupon is currently negotiating a deal with Google Inc. (NASDAQ:GOOG). Google is currently offering Groupon about $6 billion as the acquisition price. Some people believe that this is too high of a number for Google to be paying. Others think that it is too little.
Groupon is expected to hit 35 million users and will potentially earn $1.5 billion in 2011 revenue. This means that Google would be paying four times their next year’s revenues. Google paid 10 times the value of DoubleClick’s revenues and bought YouTube for $1.65 billion when they were making $11 million per year.
Groupon reads over 1,000 vendor requests per day. Of those deals, they will select one for each city and takes a 50% commission. Groupon plans to launch different tiered pricing for in the near future. Another feature that Groupon is working on is called Groupon Stores. Groupon Stores will allows vendors in Chicago, Dallas, and Seattle to set up microsites to promote deals. This model has inspired other group coupon competitors such as LivingSocial. “I think [Google is] getting a steal, I think they underpaying,” stated LivingSocial CEO Tim O’Shaughnessy. “[Groupon] should hold out for $12 billion or $18 billion.”