NEW YORK (TheStreet) -- Zulily (ZU) shares are up by 46.14% to $18.37 in early market trading on Monday, after Liberty Interactive (QVCA), owner of home shopping network QVC, announced that it is buying the company in a $2.4 billion cash and stock deal.
Liberty Interactive will be purchasing the online retailer and e-commerce company for approximately $18.75 per share, a 49% premium over the company's closing price on Friday, but below its $22 initial public offering.
Earlier this year, Alibaba (BABA) announced that it had purchased a 9.3% stake in the company.
"We are excited for zulily to join the Liberty family. Darrell, Mark and their team have built an impressive business around entertainment, discovery and value to the customer, which fits perfectly with the QVC philosophy. Combined under Liberty, we have an incredible opportunity to delight shoppers from the TV to the Internet," Liberty Interactive CEO Greg Maffei said in a statement.
Zulily's headquarters will remain in Seattle with Darrel Cavens also staying on as President and CEO of the company, following the anticipated close of the deal in the fourth quarter of this year.
Liberty Interactive shares are down 0.63% to $30.07 in early market trading today.
Separately, TheStreet Ratings team rates ZULILY INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ZULILY INC (ZU) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, deteriorating net income, disappointing return on equity, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 65.76%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 50.00% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 54.4% when compared to the same quarter one year ago, falling from $7.76 million to $3.54 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet & Catalog Retail industry and the overall market, ZULILY INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $5.97 million or 72.71% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for ZULILY INC is currently lower than what is desirable, coming in at 32.58%. Regardless of ZU's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.18% trails the industry average.
- You can view the full analysis from the report here: ZU Ratings Report