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No Stopping Groupon After Alibaba Merger Idea Circulates Wall Street

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Groupon Inc (NASDAQ: GRPN) shares were trading higher by $0.50 at $4.34 in Friday's session. Earlier in the week, the issue had one of its biggest moves in years, when it catapulted from $2.89 to $4.08, when it was reported that Alibaba Group Holding Ltd (NYSE: BABA) had taken a passive 5.6 percent stake in the company.

That rally took place after the issue had rallied from $2.24 to $2.89 on February 12 after the release of its better-than-expected Q4 report.

According to one journalist, the stake might not be so passive. Shortly after the open, a report from Young China Biz speculated that Alibaba was "likely" to enter takeover negotiations with Groupon.

Short sellers in Groupon are not waiting for the outcome and have instigated massive buying in the issue. After a higher open, it has continued to rip higher on heavy volume.

With five hours remaining in the session, it has already 21.5M shares compared to its 20 day average of 17.9M

So far, it has surpassed Tuesday's high ($4.24), reaching $4.45 and is trading right near that level. Groupon has not traded in the $5 handle since last July.

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