What Does Alibaba IPO Hold In Store For Yahoo! Inc (YHOO)?

Friday-morning action is what everyone is waiting for when China-based ecommerce entity will open its first IPO. While there is lot of skepticism about the profitability of its shares in the long run, something that is likely to make a difference is that Yahoo! Inc (NASDAQ:YHOO) owns a 22.6% stake in the company and hence is likely to benefit from the IPO in a big way. With Yahoo Finance under its belt, Yahoo! Inc (NASDAQ:YHOO) does not seem to have much going for it and hence its hopes are now pinned on the Alibaba IPO owing to several factors.

CNBC today analyzed Yahoo! Inc (NASDAQ:YHOO) with an expert named Peter Thiel, who happens to be an author of the book ‘Zero to One’ and in his opinion, although Yahoo is doing well, one point that stands against it is that it is one of those really old Internet firms, another example being that of AOL. For such companies, re-invention presents the biggest challenge as also the fact that the degree of competition is much tougher now as compared to what it was when they had started out. Therefore, it could be described as an ‘old vs new’ battle wherein renaissance is one of the options for the company that could be granted through Alibaba.

Yahoo! Inc. (YHOO)

There is also a line of thought which says that with Alibaba’s IPO round the corner, Yahoo! Inc (NASDAQ:YHOO) investors may decide to sell the parent company’s shares and acquire those of Alibaba instead. While such a decision might seem lucrative on the surface, experts have spelled out caution against it owing to several observations.

A lot depends on how Yahoo! Inc (NASDAQ:YHOO) plans its move during and after its IPO, especially when there is a precursor in form of Liberty Ventures-TripAdvisor dealing that occurred just a few weeks ago. Yahoo! Inc (NASDAQ:YHOO) has several courses of action open and right now it is just a matter of conjecture as to which it might choose. As per Heiko Geiger of Bank Vontobel Europe AG –

“At the moment, Yahoo is one of the most common U.S.-based underlyings trading in Germany. We hadn’t seen it for months.”

Comments like these are already indicative of the fact that things are looking up for the company but how long will the good run last?

This article has been written by Vinita Basu.

Related News: “Damodaran Believes That Yahoo! Inc. (YHOO)’s Alibaba’s Management Emanates Warning Signals to Share-Holders”

“Yahoo! Inc. (YHOO) Rakes in Profits, Alibaba IPO Risky Yet Attractive Investment for U.S. Hedge Fund Managers”

“Yahoo! Inc. (YHOO) Profit Rises As Alibaba to Raise up to $21.8 Billion in the IPO”

“Yahoo! Inc. (YHOO) to Benefit From Alibaba’s New Price Range for IPO”

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