With the IPO of Alibaba Private Holdings around the corner, Yahoo! Inc. (NASDAQ:YHOO) is the right stock to have in your portfolio. However, the situation was quite different a few weeks back when several investors supported the idea to abandon Yahoo and get the shares of Alibaba itself.
The primary reason behind the rumor was the fact that Yahoo! Inc. (NASDAQ:YHOO) would likely lose its value after the IPO and why would someone buy its shares given its small share in the world’s biggest speculated public offering. However, for the investors who took the advice, it didn’t pan out well as the shares of Yahoo! Inc. (NASDAQ:YHOO) has grown 17% since July 1 until yesterday.
Further, Yahoo! Inc. (NASDAQ:YHOO) is planning to sell out as many as 140 million shares in the IPO with total cash value of around $10 billion. Even after the IPO, Yahoo will have nearly 380 million shares of the company, which is evaluated at around $220 billion. With a new cash flow from the IPO and the chances of further gains from public trading of Alibaba in the next one year, it is quite likely that Yahoo! Inc. (NASDAQ:YHOO) will keep offering excellent returns to the investors.
In short, it doesn’t make much sense to dump Yahoo and buy Alibaba next week. On the contrary, try to cut off stocks that are likely to take a hit after the offering including the online e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN). One of the most impressive achievements of Alibaba is its enormous size and equally impressive growth rate, which is not likely the case of Amazon.com, Inc. (NASDAQ:AMZN). The U.S. retail giant is likely to take a hit after Alibaba’s public IPO. It is the right time to evaluate your potential options and make your choices accordingly.
This article has been written by Prakash Pandey.
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