Following Linkedin IPO and its crazy valuation, Groupon is preparing for its IPO. The IPO could value Groupon in the border of $20 billion. Groupon filed form S1 with SEC. IPO may happen in 2-3 months. In the form S1 (page 12), Groupon mentioned that it spent $179 million in the first quarter of 2011 for online marketing. However, when the company calculated its first quarter margin, it conveniently ignored the $179 million online marketing expenses and calculated the profit for Q1 2011 as $82 million. If you include the online marketing expenses, the company really had the loss of $82-$179 = $97 million.

These IPOs definitely look sexy based on all the hype surrounding them. However, if you had burnt your fingers in dot com crash of 2000, you better stay clear of all these web 2.0 IPOs until the companies’ profit picture is more clear.

It’s a sign of changing times. IPO market is picking up again. This week is the biggest week for IPO in the last 18 months. So far this week, five companies raised a total of $2.97 billion making it the biggest for IPO money-raising since the week of April 20, 2008. Another deal from Chinese company Shanda Games is on the way today. The pipeline of companies planning to go public in the U.S. has also been growing over the past two months, with 20 companies filing new registrations with the Securities and Exchange Commission since the beginning of August.

Yesterday, electric-car battery maker A123 systems came out with their IPO and saw the stock soaring 50% on the first day of trading. The company hasn’t made any profits so far. Another hot IPO, Shanda Games Ltd, is coming to market today. It’s expected to trade with the symbol “GAME”. Shanda priced its initial public offering at the high end of expectations and would sell up to $1.04 billion in equity.

If you are getting into these IPOs, keep in mind that first day gains are mostly bubble. Investing in companies with short track record is very risky. It may go in either direction.