Shares of daily deals site Groupon Inc rose more than 50 percent in their stock market debut on Friday, but at least some of the early trading exuberance may have come from limiting the fraction of the company that was sold.

The shares rose as high as $31.14, or 55.7 percent above the IPO price, in early trading on the Nasdaq, at one point pushing the market value of the company up to $19.9 billion. The shares later eased back to $28.00.

Groupon sells Internet coupons for everything from spa treatments to nose jobs, and is one of this year's most closely watched IPOs.

The offering, one of the largest in recent years, is an important barometer of investor appetite for IPOs. A strong first few trading days could help the prospects of other private Internet companies -- such as Angie's List, Zynga and even Facebook -- to pursue their own IPOs.

There is a huge backlog of companies that filed to go public earlier this year. Most plans were put on hold when the stock market slumped in August. Groupon is the first major IPO since then.

Chief Executive Officer Andrew Mason and Chairman Eric Lefkofsky hugged in Times Square after ringing the opening bell on the Nasdaq; employees at company headquarters in Chicago all donned lime green t-shirts emblazoned with the company's ticker symbol GRPN printed in old, ticker-tape-style lettering.

Some analysts and investors warn that Groupon's early surge could be a short-term phenomenon and it could reverse course and trade down like Internet radio station Pandora Media Inc.

There are still lingering questions about Groupon's business model and about competition from better-funded rivals such as Inc and Google Inc.

They wanted to have a decent pop on the stock so they didn't take that much public, said David Berman, a consumer technology and retail specialist at hedge fund firm Durban Capital. They created demand by limiting supply, and they got the pop.

On Thursday, Groupon upsized its IPO and sold 35 million shares for $20 each. But that stake amounts to only about 5 percent of the company.

The $700 million raised was on the larger side for a U.S. IPO, but the 5 percent represented the second-smallest share float in the United States in the past decade, according to capital markets data provider Ipreo.

Underwriters on the IPO were led by Morgan Stanley, Goldman Sachs and Credit Suisse.

(Reporting by Clare Baldwin in New York, Alistair Barr in San Francisco and James Kelleher in Chicago; Editing by Derek Caney and Gerald E. McCormick)