Alibaba (BABA) has had a rough time in the market over the past several months. That is, until February 12. Since then, the stock has been climbing in a big way, and for good reason. The company made the decision to buy a sizable stake in Groupon (GRPN). Today, we’ll talk about the stake Alibaba purchased in Groupon, why the purchase is causing big gains, what we can expect to see moving forward, and how binary options traders can take advantage of the trends. So, let’s get right to it…

[Image Courtesy of Wikipedia]

Alibaba Buys A Large Stake In Groupon

In February, Alibaba made a huge move. It made the decision to buy a large portion of the online coupon website known as Groupon. In fact, Alibaba purchased a 5.6% stake in the company. While that’s a huge investment, it’s also a very strong move for Alibaba, not just in terms of return on investment. In fact, I don’t think the investment was made for the return at all, instead, I think the investment was made for Alibaba’s own growth. Let me explain…

Why Investing In Groupon Is Great For Alibaba

The investment in Groupon is an incredible investment for Alibaba. However, that has very little to do with the returns that Alibaba will see from the investment. The more important aspect is access to technology. You see, Alibaba is China’s largest online retailer, but that doesn’t mean that it is free of competition. In fact, competition in the industry is becoming more and more of a problem, and some companies have already ventured into the paid coupon space. So, to keep up with the competition, Alibaba is going to have to start thinking about offering paid coupons as well. By investing such a large amount of money into Groupon, Alibaba now has access to the technology and can use the information to build its own coupon site that’s targeted to Chinese consumers. It’s also rumored that over time, Alibaba may actually acquire Groupon, giving it full access to the technology that has been years in the works.