Alibaba has had a rough time in the market over the past several months. That is, until February 12th. 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. 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…
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, in the month of February the 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.
How The Market Reacted To The News
As binary options traders, we know that the news moves the market. It's clear that investors are excited about Alibaba's investment in Groupon. In fact, since the announcement was made in mid-February, the stock has climbed by nearly 10% and seems as though it's going to continue on the uptrend.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly positive opinion of what we can expect to see from Alibaba. The reality here is that Jack Ma, the founder and CEO of the company is an absolute genius. Since the creation of the company, he has been able to stay one step ahead of the competition, leading to Alibaba's leadership role in online retail, online payments, and more in the world's second largest economy. Now, Jack Ma has his eyes on selling extreme discount coupons, and to do so, he's made one of the strongest investments we've seen from a company in the sector in history. All in all, things are looking great for Alibaba in both the short and long term.
How To Take Advantage Of The Trends
As binary options traders, its our job to predict where the values of financial assets are headed. Because of the positive news we've seen out of Alibaba lately, it's more likely that the stock will climb than fall. As a result, binary options traders should be watching for strong call option opportunities in order to take advantage of the trends.
What Do You Think?
Where do you think Alibaba is headed and why? Let us know your opinion in the comments below!
[Image Courtesy of Wikipedia]