NEW YORK (TheStreet) -- Groupon (GRPN - Get Report) stock is up by 16.96% to $3.38 in pre-market trading on Tuesday, after Alibaba Group (BABA) took a stake in the company.

Alibaba, a Chinese e-commerce company, took a 5.6% stake in Groupon, which is an online local commerce website, Bloomberg reports.

Alibaba's stake in the Chicago-based Groupon could help the company learn about the U.S. market, Gil Luria, an analyst at Wedbush Securities, told Bloomberg.

"They don't want to have their own operations, so they are investing in other companies to help them learn and pave the way for more robust activity down the road," Luria said.

Alibaba stock is up by 3.94% to $60.90 in pre-market trading on Tuesday.

Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rates this stock as a "sell" with a ratings score of D. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

You can view the full analysis from the report here: GRPN

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