Daily deals website Groupon could be valued at as much as $25 billion in an initial public offering, Bloomberg reported on Thursday, citing two people with knowledge of the company's discussions with banks.

The multi-billion dollar valuation is the latest in a string of high valuations for hot Internet companies including Facebook and Twitter, and raises questions about which companies will ultimately survive.

Jeffrey Grau, a principal analyst with eMarketer, said Groupon might not be able to sustain a high valuation.

I see a number of challenges ahead. LivingSocial is really making a push to really compete with Groupon, Grau said.

In the short term the outlook is very bright. However, they are going to face a lot more competition.

Groupon's IPO might happen this year and would likely value Groupon at a minimum of $15 billion, the sources told Bloomberg.

Groupon declined to comment on the report.

Groupon founder and Chief Executive Andrew Mason told Reuters in January that the company was considering a public offering and was in talks with bankers, but had not yet made a decision about whether to proceed.

A source told Reuters in January that a Groupon offering would be meaningfully sized.

The two-year-old start-up rebuffed a $6 billion advance from Google Inc late last year, according to media reports. Over the course of 2010 it grew to 50 million users, from 3 million, in 500 cities in 40 countries.

(Reporting by Maria Aspan and Jennifer Saba; editing by John Wallace and Gerald E. McCormick)

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