Alibaba Bought 5.6% Stake in Groupon

The online retailer has succeeded in buying a stake of 5.6% in Groupon for penetrating into the US E-commerce market

Alibaba Group Holding Limited has purchased 5.6% share in Groupon, turning it into the fourth biggest shareholder in the online deal webpage, a regulatory filing has recently revealed. The online retailer was required to file its stake as it had reached a particular limit.

This means that the Chinese electronic commerce company now owns 33 million shares of the American company. The shares of the Chicago based company were still decreased by 61% in the past one year, despite of an increase by 29% in the last week on Friday.

Apart from Groupon, the online trading giant has also purchased shares in other organizations such as tech start up Magic Leap, online retailer Jet.com and a transportation network enterprise Lyft. The Hangzhou based company has refused to share its views regarding the filing. In the meantime, spokesperson of Groupon Bill Roberts has stated the enterprise is not aware of the stake of Alibaba, not until the regulatory filing disclosed on 12^th February 2016.

On Thursday, the online dealer reported its final quarter results that succeeded in surpassing predictions made by analysts due to rising sales in the North American region. Groupon stated it recorded a profit of 4 cents per share, surpassing analysts’ estimations that the company would reach break-even point.

Groupon has stopped operating in 17 states and is presently operating in 28 as it has continued to do streamlining of its operations across the globe. It was previous known as one of the most popular Internet brands, becoming famous by following a business model that helped it play a role of a broker between consumers and conventional retailers, offering huge discounts from merchants such as movie theaters and restaurants.

It’s rapid growth took place at a time when the group purchasing sites in China boomed, and the US company used to be a Chinese group purchasing site’s co-owner in collaboration with China based internet company Tencent.

But that was followed by the fading of the group purchasing sector almost as rapidly as it grew, leading  the star of Groupon to get dimmed and number of its China imitators to enter the market .

In the later part of 2011, Groupon was successful with a high profile initial public offering when it used to be an emerging star, offering its shares at a price of $20 and reaching a market value of around $12 billion.

For a short period of time, it’s shares reached a price of $31 shortly after it began to trade in the stock market, but have decreased in terms of value since then due to its failure to find a method to increase and recorded lackluster growth of revenue.

Even after the huge rise in recent times, its shares are now trading at around 85% less than their IPO level.