Alibaba buys nearly 33 million shares of Groupon

Groupon Inc.’s stock jumped more than 40 per cent in afternoon trading Tuesday.

Today’s increase was primarily driven by the investment of Alibaba Group Holding (NYSE:BABA) in the daily deals company. The information was revealed through a regulatory filing, which stated that the Chinese giant owned 5.6 of Groupon as on December 31.

Alibaba has accumulated stakes in other companies in the USA including Jet.com an online retailer, Magic Leap a provider of augmented reality and Lyft Inc a car-hiring company. As a result, Alibaba has become the fourth largest shareholder of Groupon. The stock has soared about 74 percent in two days, combined with its 29 percent gain on Friday.

A Groupon representative told Bloomberg that the company had not been aware of Alibaba’s stake until the public filing.

“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”, Roberts said.

Williams said Groupon entered 2016 with a continue focus on streamlining its global operations, reducing its reliance on low margin products and rekindling customer acquisition efforts to position the company towards an accelerated growth. This past November, the company hired Rich Williams as CEO to take the place of Eric Lefkofsky.

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 Friday’s gains, the shares are down 61 percent over the past 12 months. It’s revenue came in at $917.2 million, which was above the $845.9 million expected of it. Williams said on Bloomberg TV Friday that the stock was undervalued, though he wasn’t looking to make any deals.