Large Chinese e-commerce company Alibaba Group Holding Ltd (NYSE:BABA) now holds a 5.6% stake in Groupon Inc (NASDAQ:GRPN) , after they purchased around 33 million shares of Groupon’s stock. Groupon is a global e-commerce marketplace, providing consumers with special deals from their partners. Groupon has been a public company for around 4 years. Their stock has lost nearly 90% of its value since they went public towards the end of 2011. Their stock peaked in 2011, trading in excess of $26 per share.
Groupon’s stock is up by nearly 30% today, trading at almost $3 a share (still only a fraction of what it was valued at a few years ago.) Alibaba’s 5.6% stake in the firm means that they are Groupon’s fourth largest shareholder. Alibaba also holds a large amounts of shares in firms such as Jet.com INC, Lyft INC and Magic Leap INC.
Groupon Inc (NASDAQ:GRPN) spokesman Bill Roberts said that “Alibaba has a reputation as a long-term holder, and we’re pleased that they take the same view of Groupon’s opportunity and execution as we do.”Groupon released their financial data for the fourth quarter of 2015 last Thursday, exceeding analysts’ expectations (this was largely down to an increase in sales in North America.)
In November, Groupon replaced their Chief Executive Officer (CEO) Eric Lefkofsky with Rich Williams. Since then, Rich Williams has substantially increased the budget available to Groupon’s marketing department in a bid to return the firm to its former “glory days.” In an interview, Rich Williams said “If we do our jobs really well, we’ll beat our plan, the reality is we have a lot of work to do.”
Despite the surge in their share price today, Groupon Inc (NASDAQ:GRPN) is trading at a bargain price of under $3 per share. There is huge potential for the value of their stock to increase. This is a (potentially) highly lucrative investment opportunity for investors. Investors can purchase Groupon’s stock dirt cheap now, in the hope that the firm’s performance will improve due to the new leadership (CEO Rich Williams.) Groupon now operates in 28 countries, and Rich Williams said “We are feeling pretty good about our footprint, but we are going to continue to evaluate it opportunistically.”
Alibaba Group Holding Ltd (NYSE:BABA) is a formidable investor, with a market capitalization of around $150 billion, and access to a large pool of funds. 2016 could be the year of Groupon’s revival, and Groupon’s stock should definitely be considered as a long term investment opportunity.