Alibaba vs Groupon Which Should You Buy?

Alibaba Group Holding Limited and Groupon, Inc. are two prominent e-commerce companies that operate in different markets and have unique business models. Alibaba, a Chinese multinational conglomerate, dominates the online retail and technology industry in Asia, while Groupon, an American e-commerce marketplace, specializes in connecting consumers with local businesses through discounted deals. Both companies have experienced fluctuating stock prices due to various factors such as market competition, regulatory changes, and consumer trends.

Alibaba or Groupon?

When comparing Alibaba and Groupon, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Alibaba and Groupon.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Alibaba has a dividend yield of 0.16%, while Groupon has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Alibaba reports a 5-year dividend growth of 0.00% year and a payout ratio of 38.84%. On the other hand, Groupon reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Alibaba P/E ratio at 20.37 and Groupon's P/E ratio at 21.91. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Alibaba P/B ratio is 2.46 while Groupon's P/B ratio is 10.58.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Alibaba has seen a 5-year revenue growth of 1.52%, while Groupon's is -0.82%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Alibaba's ROE at 12.47% and Groupon's ROE at 95.71%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $133.34 for Alibaba and $10.02 for Groupon. Over the past year, Alibaba's prices ranged from $68.36 to $145.30, with a yearly change of 112.55%. Groupon's prices fluctuated between $7.75 and $19.56, with a yearly change of 152.39%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.