Regency Associates reports beleaguered daily deals marketplace platform, Groupon has seen its stock skyrocket by 70% in just two trading sessions after Chinese internet giant, Alibaba, revealed a 5.6% stake. According to a regulatory filing, Alibaba said it bought 33 million shares in the company which has lost some 80% of its market value since it went public in November 2011.

Groupon has been frustrated in its efforts to generate growth since its original business model focused too heavily on attracting new customers at the expense of existing ones.

“Groupon went from zero to hero in an astonishingly brief period of time but poor business decisions saw it lose customers at an equally alarming rate. Alibaba’s stake makes it Groupon’s 4th largest shareholder while helping to rekindle broader investor interest in the company’s move away from its once-core daily deals business model,” explained Shem Orbison, Regency Associates’ chief economist.

Groupon is transitioning into a marketplace where consumers are able to discover deals on goods and services. In a bid to streamline its international operations, it has wound down in 17 countries and now trades in 28.

Despite the surge in the stock’s value over the last few days, it is still down by 49% over the past year but the Alibaba stake could prompt other companies to take a closer look at Groupon’s plans to reinvent itself.

Regency Associates said it had yet to be convinced of the efficacy the Groupon’s reinvention citing similarities with well-established players like eBay and Overstock.com both of whom have a considerable head start in terms of development and consumer loyalty.

About Regency Associates
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