Groupon Stock Soars Following Alibaba Stake

Groupon Inc saw its stock surge for the second consecutive trading day. This time the upswing came after it was announced that e-commerce behemoth Alibaba Group Holding bought a stake of 5.6% in the marketplace online.

That helped rekindle interest by investors as the company quickly moves away from its longtime roots as a provider of daily deals.

The e-commerce company based in China bought over 33 million shares of Groupon, showed a regulatory filing from Friday after the markets had close, making it the fourth biggest shareholder in the online marketplace that has lost close to 80% of its value since it went public in November of 2011.

Groupon shares soared by 35% on Tuesday morning in New York and at one time 38% which made it the highest intraday gain since the company based in Chicago had its initial public offering.

The stock has increased by 74% in just two days, combined with its gain of 29% last Friday.

Groupon has had problems since the IPO in growth as well as profit. This past November, the company hired Rich Williams as CEO to take the place of Eric Lefkofsky. Williams had increased the budget for marketing in an attempt to revive as well as reinvent the one-time darling of the Internet.

The company also has left 17 countries and is operating in 28 as it begins to streamline operations internationally.

The stake by Alibaba was reported after Groupon had reported results for the fourth quarter that had beaten estimates by analysts, driven from purchases across North America.

The company announced that profit excluding certain costs was 4 cents per share in comparison to analyst’s estimates of break even for the quarter.

Even with gains, the shares are still down approximately 50% over the past year.

Alibaba has accumulated stakes in other companies in the U.S. including an online retailer, Magic Leap a provider of augmented reality and Lyft Inc a car-hiring company.

A spokesperson for Groupon said last Friday that the company was not aware of the stake taken by Alibaba until the Friday filing.

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