Yahoo bought 40% of Alibaba in 2005 for $1 billion and has sold one third of its stake. While I don’t know how Alibaba will be valued at IPO, the general expectation in the Wall Street is that Alibaba will be priced at $200 billion when it goes public in August. If this turns out to be true, then Yahoo’s stake of Alibaba will be worth approximately $48 billion. With Yahoo’s current price around $34, its market cap is only about $35 billion. In other words, if you buy Yahoo now, you get an almost 30% discount of its Alibaba’s stake and you basically get all of Yahoo’s other assets free. To me this is a huge gem the market is offering to us. Yes, Yahoo’s shares may still be up or down depending on the mood of the market but as a value investor, I will be very interested in it for long-term. I have already taken some substantial profit via the position I made when Yahoo was around $15. This is another great time to invest in Yahoo! The lower it goes the better you can position yourself!!
Wednesday, June 18, 2014
How much is Yahoo worth now?
I
said Yahoo is kind of backdoor approach to jump start your bet on the Alibaba’s
IPO which you won’t be able to buy at a good price. In the past couple of
weeks, the Yahoo stock has gone through a rollercoast price change, first
shooting up quite well to $37 and then plunging all the way back to around $34.
All was related to Alibaba since Alibaba provided more detailed revenue
information that was short of expectations. This in a way further demonstrates
that via the Yahoo stock it is an effective way to bet on Alibaba’s IPO. So is
Yahoo a good buy at $34 or lower? Let’s do some simple calculation.
Yahoo bought 40% of Alibaba in 2005 for $1 billion and has sold one third of its stake. While I don’t know how Alibaba will be valued at IPO, the general expectation in the Wall Street is that Alibaba will be priced at $200 billion when it goes public in August. If this turns out to be true, then Yahoo’s stake of Alibaba will be worth approximately $48 billion. With Yahoo’s current price around $34, its market cap is only about $35 billion. In other words, if you buy Yahoo now, you get an almost 30% discount of its Alibaba’s stake and you basically get all of Yahoo’s other assets free. To me this is a huge gem the market is offering to us. Yes, Yahoo’s shares may still be up or down depending on the mood of the market but as a value investor, I will be very interested in it for long-term. I have already taken some substantial profit via the position I made when Yahoo was around $15. This is another great time to invest in Yahoo! The lower it goes the better you can position yourself!!
Yahoo bought 40% of Alibaba in 2005 for $1 billion and has sold one third of its stake. While I don’t know how Alibaba will be valued at IPO, the general expectation in the Wall Street is that Alibaba will be priced at $200 billion when it goes public in August. If this turns out to be true, then Yahoo’s stake of Alibaba will be worth approximately $48 billion. With Yahoo’s current price around $34, its market cap is only about $35 billion. In other words, if you buy Yahoo now, you get an almost 30% discount of its Alibaba’s stake and you basically get all of Yahoo’s other assets free. To me this is a huge gem the market is offering to us. Yes, Yahoo’s shares may still be up or down depending on the mood of the market but as a value investor, I will be very interested in it for long-term. I have already taken some substantial profit via the position I made when Yahoo was around $15. This is another great time to invest in Yahoo! The lower it goes the better you can position yourself!!
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