Shares in Groupon soared more than 50% in New York as the online discount firm became the biggest internet flotation since Google.

Groupon raised $700m (£437m) in a hotly anticipated initial public offering that saw its newly listed stock climb from $20 to $31.14 in early trading on the Nasdaq.

The listing was reportedly close to being pulled in September, as Groupon's founder, Andrew Mason, rounded on critics who had raised concerns about the company's cash burn – it has lost $238m over the past nine months – and the scale of the competitive threats it faces.

Groupon pushed ahead but Friday's $12bn valuation is below the lofty price tags that had been bandied about prior to the listing, with some estimates claiming that the business was worth up to $25bn.

The flotation proceeds rank Groupon as the largest internet IPO since Google raised $1.7bn in 2004.

The road to Wall Street has been a tumultuous one for the Chicago-based company. Selling online discounts for everything from foot spas to nouvelle cuisine, Groupon has faced months of criticism from regulators and analysts, raising doubts as to whether the company would go public at all.

Despite putting off its IPO, Groupon has been seen as a litmus test for other private internet companies seeking to go public, including online games maker Zynga and Facebook.

But behind the scenes investors scrabbled for Groupon shares, which were 10 times oversubscribed. Its tiny float represents just over 5% of the company's stock, which has helped to drive up demand and the price.

Rob Romero, head of technology-focused hedge fund Connective Capital Management, remained cautious. "Groupon is expensive. The $12.8bn valuation is only achievable because of the low float," he told Reuters.