Alibaba gets a deal and Groupon gets a lift

One of the allures of Groupon for consumers is that it can help you get a good deal on something that you might not have bought in the first place.

That same philosophy may be in play with Chinese e-commerce giant Alibaba. Last Friday, prior to the Presidents’ Day weekend, Alibaba disclosed in a regulatory filing that it had bought 33 million shares of Groupon stock, and now owns 5.6 percent of the online deals company. Alibaba said its ownership stake was current as of Dec. 31.

And it’s safe to say Alibaba got a deal. Groupon’s stock had been hovering near the price of a gallon of gas for months, and last Thursday, closed at $2.24. Then, Groupon reported decent quarterly results, and saw its shares climb 29 percent on Friday, to $2.89.

But when investors got into the fray on Tuesday, they couldn’t buy Groupon fast enough. The company’s share price reached levels not seen in three months, as it surged almost 40 percent, to $4.01.

So, what’s in it for Alibaba? The company has been looking at ways of building up its presence in the U.S., and other markets, and owning a piece of Groupon give is just that. It also starts what will certainly be a lot of talk about whether Alibaba might be angling to acquire all of Groupon outright.

If it does, even at around $4 a share, Alibaba would be getting a deal. Groupon’s market capitalization is about $2.3 billion… or, about a third of the $6 billion that Google thought Groupon was worth when it reportedly tried to buy the company back in 2010.

Photo: Bay Area News Group Archives

 

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  • John Smith

    I laugh when journalists attempt to be securities analysts. There is a reason that GRPN is down from the $6.0B Google offered YEARS ago.

 
 
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