Yahoo! Inc. (YHOO) May Lose Its Momentum After Alibaba Group Holding Ltd’s IPO

Yahoo! Inc. (YHOO)

It’s been nothing short of a dream run for Yahoo! Inc. (NASDAQ:YHOO)’s stocks in the past one month with an increase of 16.43% in its shares prices. However, experts are opined that the company’s stock may not attract the investors post Alibaba Group Holding Ltd’s public offering.

Yahoo! Inc. (NASDAQ:YHOO) have witnessed a two-fold increase in its share prices in the past two years primarily because of its stake in Alibaba Group Holding Ltd. The same sentiment is pushing Yahoo’s stocks up with 5.61% increase in share prices on Monday, as Alibaba announced initial price range of its stock to lie between $60 and $66.

Yahoo! Inc. (YHOO)

With an expected sale of 140 million shares, Yahoo! Inc. (NASDAQ:YHOO) is likely to bag $5.7 billion post-tax amount and the company has announced 50% of the amount in dividends for its investors. According to market expectation, Alibaba is valued at around $220 billion and Yahoo! Inc. (NASDAQ:YHOO) would have to hold its remaining shares for at least one year after the IPO.

However, the public availability of Alibaba’s shares would reduce investors interest Yahoo in addition to the fact that the company has not laid any plans to save the tax-money out of the IPO. Further, Yahoo! Inc. (NASDAQ:YHOO)’s business has been struggling for past several years and the company has not made any announcements for the rest of the proceedings from Alibaba IPO. These factors are likely to work against its personal interests in future.

Earlier, Alibaba Group Holding Ltd’s founder, Jack Ma, said that the company would focus on increasing its revenue in China instead of overseas markets. The company is likely to be the biggest IPO offering with largest valuation in the U.S. stock market.

This article has been written by Prakash Pandey and edited by Serkan Unal.

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