From $1 million to several billions of dollars after just four years, Groupon is undoubtedly an industry phenomenon. They generated quite a buzz around addictive daily deals, setting the trend for an entirely new market that spans mobile, web and local initiatives, spurned by the social space.  However, Groupon’s staying power is still in question, even after they entered the IPO craze fairly strong last week.  Some think they peaked too fast and excited the public prematurely–their valuation diminished by more than half in just days, following a sensational entrée in the stock market.

The Biggest IPO Company, Next To Google

Groupon made history when they become the largest U.S. web IPO company since Google in 2004. The daily deals leader raised $750 million for their IPO, beating experts’ prediction of just $480 to $540 million.

Head of technology-focused hedge fund firm Connective Capital Management, Rob Romero has an experts’ take on this one saying, “Groupon is expensive. The $12.8 billion valuation is only achievable because of the low float. Today’s reaction to LinkedIn floating additional share supply is an indication of how tight supply-demand of shares can distort valuation for a new IPO.”

Groupon: Pre-IPO, In Betweens and Post IPO

Perhaps publicity played a good role in shoving interest towards Groupon’s IPO. The fever cools down momentarily as the company reportedly has doubts on going public, and would like to seek market viability first. Nevertheless, amidst the instability and thinning pipeline of the IPO industry, and skepticism (not to mention Groupon’s dilly-dallying), Groupon headed to the trading arena just over a week ago.

Wall Street raked in $42 million from Groupon’s initial public offering underwriting fees and discounts. But when the first day came to an end, very few to almost none of the buyers or sellers emerged richer, as returns posted an average of 3.3%.  In fact, just about one fifth, or 22.3% of investors dumped the stock the same day.  A microscopic portion of flippers were able to buy shares cheaply for $20 and those without “backers” or “insiders” to turn to spent somewhere from $28 to $30.  SigFig’s inforgraphic chronicles the journey of Groupon from nobody to a Google runner-up at the IPO race and all the spices in between.

Clearly, volatility is one of the toxic that could eradicate the spark in Groupon and all other IPO in general. Their ability to ignite growth in the next few months or years could be the make or break dynamic.

Groupon Eyes Holiday Rush

While the market may still have its reservations with Groupon, the holidays will potentially be a money-making period for them. They’ve already crafted plans to strike gold around Thanksgiving, Christmas and more.  Grouponicus, the company’s holiday shopping deal in 2010 will be revived this year, catering to 41 cities in the U.S. and Canada.

You do not have to a stock market connoisseur to know that social network IPO’s have potential to do well in the trading business. The nearly billion Facebook users and hundreds of million tweets a day are lucid indications that people are drawn to be virtually social, and that businessmen will grab any opportunities surrounding the space.