Groupon, Inc. (GRPN) gapped up at the open Friday and has risen nearly 5% in early trade on above average volume. The stock is surging following a Journal report that Alibaba Group (BABA) is in talks with several banks for a loan of as much as $4 billion.
Ever since Alibaba disclosed in an SEC filing earlier this month that it acquired nearly 33 million shares of Groupon in the fourth-quarter, shares have spiked nearly 85% since Feb. 11 amid speculation the Chinese e-commerce giant, currently Groupon’s fourth-largest shareholder, could ultimately move to acquire the deals site. It’ worth noting that while the report does not mention Groupon in any capacity, it does say that Alibaba is seeking the loan to fund its expansion plans, which could include acquisitions.
For what its worth, Groupon’s current market cap is $2.43 billion, nearly 60% below the $6 billion buyout offer from Google (GOOGL) in fiscal 2010 that Groupon rejected.
On valuation metrics, Groupon Inc. shares are priced at 129.38x this year’s forecasted earnings, compared to the industry’s 7.75x earnings multiple. The name’s current year and next year EPS growth estimates stand at (142.9%) and 166.70%, compared to the industry growth rates of 12.10% and 19.40%, respectively. GRPN has a t-12 price-to-sales ratio of 0.79. EPS for the same period registers at $0.03.
Groupon shares have advanced 48.92% in the last 4 weeks and 47.86% in the past three months. Over the past 5 trading sessions the stock has gained 7.81%. The Chicago-based deals site has a median Street price target of $3.50 with a high target of $5.50.
Groupon Inc. is down 49.88% year-over-year, compared with a 7.26% loss in the S&P 500.