Groupon Inc (GRPN) Shares Surge After Alibaba (BABA) Announces Stake in Company


It’s been one heck of a morning before the market even has opened if you are a Groupon Inc (NASDAQ:GRPN) shareholder. On Friday Alibaba (NYSE:BABA) announced that they had taken a sizeable stake in the discount ecommerce company. The stake, which Alibaba says amounts to 32.97 million shares, or approximately 5% of the company is now worth around $100 million.

Groupon Inc (NASDAQ:GRPN), whose stock has struggled immensely over the last year, dropping close to 70% since the start of 2015, certainly could use a spark like this to push short sellers out of the stock and bring in new confident investors. While a 5% stake isn’t earth-shattering, it does show that one of China’s most successful ecommerce brands has a good deal of confidence in Groupon’s (NASDAQ:GRPN) future plans.

Shares of Groupon Inc (NASDAQ:GRPN) are trading up $0.49 or 16.96% in the pre-market this morning, while shares of Alibaba (NYSE:BABA) are up $2.16 or 3.55%. The stock increased 29.02% or $0.65 during the last trading session, hitting $2.89. About 253,273 shares traded hands. GRPN has declined 40.29% since July 10, 2015 and is downtrending. It has underperformed the S&P500 by 31.42%.

From a total of 11 analysts covering Groupon Inc (NASDAQ:GRPN) stock, 3 rate it a “Buy”, 1 a “Sell”, and 7 a “Hold”. This means that 27% of the ratings are positive. The highest target price is $8 while the lowest target price is $2.25. The mean of all analyst targets is $4.07 which is 40.83% above today’s ($2.89) stock price. Groupon Inc was the topic of 24 analyst reports since August 5, 2015 according to the firm StockzIntelligence Inc. UBS maintained shares on November 4 with a “Neutral” rating. Brean Capital maintained shares with a”Buy” rating and a $5 target share price in their report from a November 4. Bank of America downgraded GRPN stock in a recent report from November 4 to a “Underperform” rating. Finally, RBC Capital Markets maintained the stock with a “Sector Perform” rating in a report they issued on a November 4.

The institutional sentiment decreased to 0.68 in Q2 2015. It’s down 0.94, from 1.62 in 2015Q2. The ratio dropped, as 47 funds sold all their Groupon Inc shares they owned while 74 reduced their positions. 26 funds bought stakes while 56 increased their total positions. Institutions now own 347.40 million shares which is 15.45% less than the previous share count of 410.89 million in 2015Q2.

Nea Management Company Llc holds 9.49% of its total portfolio in Groupon Inc, equating to 44.17 million shares. Brightfield Capital Management Llc owns 625,000 shares representing 6.54% of their total US portfolio. Moreover, Simcoe Capital Management Llc has 2.88% of their total portfolio invested in the company, equating to 1.34 million shares. The Washington-based Lesa Sroufe & Co has a total of 2% of their portfolio invested in the stock. Parametrica Management Ltd, a Hong Kong-based fund reported 95,292 shares owned.

Groupon, Inc. operates online local commerce marketplaces world over that connect merchants to clients by offering goods and services at a discount. The company has a market cap of $2.20 billion. The Firm operates through three divisions: North America, which represents the United States and Canada; EMEA, which consists of Europe, the Middle East and Africa, and international activities . It currently has negative earnings. The Firm offers deals on goods and services in three categories: Local Deals (Local), Groupon Goods (Goods) and Groupon Getaways (Travel).