The IPO ranks as the second-largest Internet IPO this year, after Russian Internet search engine operator Yandex NV, according to Thomson Reuters. Yandex's highly successful IPO on the Nasdaq in May also priced above its estimated $20 to $22 target range, valuing the company at about $8 billion.

Groupon's stock began trading on the Nasdaq Friday, opening at $28. Shortly before noon, the stock was at $28.34, or 41.70% above its IPO price. Yandex's valuation was viewed as frothy at the time. Likewise, some analysts predicted that an overly rich valuation for Groupon -- at about $12.8 billion at the IPO -- would be driven largely by its minuscule initial float of about 5% of outstanding shares, said to be one of the lowest floats of the past decade.

"With shares sold in the IPO representing only 5% of the company's shares outstanding, the stock could trade up after listing because of this favorable supply and demand dynamic," said Kathleen Smith, a principal at Renaissance Capital, a Greenwich, Conn.-based IPO research boutique. "Groupon is tapping the IPO market at a challenging time," Smith said, though she added that the market has improved "substantially" since the beginning of the third quarter. "We see institutional money flows beginning to come into these types of unseasoned stocks," Smith said.

Still, U.S. IPO issuance dropped 42% in the third quarter this year, marking the third consecutive quarterly decline, Thomson Reuters said. Groupon's upsized IPO, increased to 35 million shares from 30 million shares, may serve as a bellwether for Internet IPOs, though that remains to be seen as markets continue to gyrate amid global economic uncertainties and the European sovereign debt crisis. The 2-1/2-year-old company, a popular provider of daily discounted offers for goods and services based on locality and personal preferences, is expecting to generate about $1.6 billion in revenue this year but remains unprofitable.

The buzz generated by its IPO filing in June has been tempered by missteps. Regulators had revealed accounting discrepancies that led to the company's restatement of financials in September that essentially cut its revenue by half. Analysts have also raised questions over its optimistic growth projections, pointing to the threat posed by hundreds of competitors, including Google Inc.'s Google Offers and Living Social, which is backed by Amazon.com Inc.

Groupon "offers investors a new business model in an emerging market" and has shown "impressive growth," said Smith. However, she said her firm has "advised our institutional clients that Groupon still faces significant concerns about expense management and their ability to continue their customer development."