Groupon Inc. (NASDAQ: GRPN) shares soared for a second straight trading day on the news that Chinese e-commerce giant Alibaba Holding Group (NYSE: BABA) had bought a big stake on online daily deal service company in the fourth quarter.
Alibaba announced that it bought nearly 33 million shares of Groupon in the fouth quarter, about 5.6% stake, according to a regulatory filing Friday after the close of markets. The purchase makes Alibaba the fourth-largest shareholder of Groupon.
The news was reported one day after Groupon reported its fourth-quarter earning result that beat analyst estimates. The strong result is driven by purchases in North America. The company said profit excluding some costs was 4 cents a share, compared with the average analyst estimate for a break- even quarter.
Groupon shares jumped 40.83 percent to $4.07 at 2:01 p.m. in New York. The stock soared about 29 percent on last Friday after the earning report. So the shares was up a total 74 percent in two trading days, the biggest gain since the initial public offering of the Chicago-based company. Even with the gains the shares are down about 50 percent over the past 12 months.
Groupon had been struggled since its IPO. The company named Rich Williams as the new Chief Executive Officer in November in order to make some changes. The new CEO has increased the marketing budget and led the company to exit 17 countries and to operate in 28 countries now.
Groupon is not the only U.S. Company Alibaba takes stake. The Chinese e-commerce giant also takes stakes in online retailer Jet.com Inc., augmented-reality provider Magic Leap Inc. and car-booking company Lyft Inc.
“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 spokesman Bill Roberts said.
Alibaba shares also jumped 9.36% to $66.58 at 2:37 p.m. in New York.