Zulily is surging after Alibaba buys 9% of the company

Shares of Zulily spiked more than 18% in pre-market trading on Monday after news over the weekend that Alibababought a more than 9% stakein the company.

According to regulatory filings, Alibaba said it bought around 4.8 million class A shares for around $US56 million.

Zulily is an online retailer that targets mothers, with daily deals on clothes, toys, and other things for their children.

Last Tuesday, it reported first quarter results, with revenue coming in at $US306.6, missing expectations, while diluted earnings per share of $US0.01 came in slightly better than expected. Zulily shares tumbled more than 16% in trading on Wednesday.

The big letdown from the company was a weak outlook for second quarter revenues: the company said it sees Q2 revenue coming in at $US285 — $US300 million, well below Wall Street’s forecast for $US361.7 million.

Alibaba’s quarterly results, in contrast, topped expectations for earnings and revenues. Analysts at Wells Fargo forecast that the Chinese e-commerce company will soon overtake Wal-Mart to become the largest retailer in the world.

Zulily shares are down 43% year-to-date, and 56% over the past 12 months.

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