Zulily Takes Off With Additional Alibaba Stake

Shares of e-commerce company Zulily Inc ZU are set to open an additional 20 percent higher Monday following news that Alibaba Group Holding Ltd BABA acquired 4.8 million more shares for $56 million. Alibaba now owns 11.5 million shares, according to the SEC filing.

Zulily holds flash sales of clothing and items that cater primarily to women and children. Alibaba now owns 9.3 percent of the company.

This 20 percent pre-market gain is on top of a 12 percent gain from Friday.

The Wall Street Journal reported that Alibaba is not interested in acquiring Zulily outright. This is not Alibaba's first foray into e-commerce investments; the company previously invested $15 million in 1stdibs, a luxury e-commerce company. In 2013, Alibaba also led an investment round in ShopRunner, a logistics company offering two-day shipping from U.S. retailers. Alibaba has also invested $200 million into startups Snapchat and $215 million in TangoMe.

Zulily was a hot IPO in late 2013 and into early 2014 when the price skyrocketed from the mid-$30s to more than $70 per share. Year-to-date, the company has struggled, falling 43 percent to close Friday at $13.30.

The company hit its all-time low of $9.09 on May 6 after reporting dismal earnings. Revenue growth has decelerated substantially. In Q1 2014, revenues grew at 87 percent year-over-year. This year, revenues grew just 29 percent. The company also warned on Q2 revenues, guiding to $285 to $300 million, well below the $362 million in revenues that the Street was looking for.