The idea that a coupon company could be worth so much is crazy. Coupons are only a small fraction of a companies marketing mix while in contrast, advertising (Google) demand a constant investment.
However, it is also hard to ignore Groupon's stellar growth. The two year old start up has announced that it has expanded its presence from 1 to 35 countries and from 2 million users to more than 50 million last year alone. Bloomberg has announced the comany's IPO worth to as much as $25 billion; beating Google by $2 billion since it went public in 2004.
Not bad considering that at the same time last year the company was valued at $1.3 billion. It has also since then raised over $950 million in investment capital. Its to early to say whether Groupon backing down from Google's $6 billion offer was stroke of genius or simply a bad call.
Investors like Ben Horowitz, a partner at Andreessen Horowitz, says that he is not worried about new competitors due to Groupon's huge sales force size that will make it hard for competitors to scale up.
The only issue I take with Groupon is that its business model can be easily replicated, thus leaving it susceptible to substitution by consumers. Groupon has to work hard at differentiating itself in both quality and service to make sure that it will endure.
Sources
http://venturebeat.com/2011/03/17/groupon-25-billion-ipo/
http://venturebeat.com/2010/12/03/groupon-rejects-googles-offer/
http://dealbook.nytimes.com/2011/03/17/groupon-valuation-soars-as-possible-i-p-o-nears/?src=dlbksb