After facing resistance from activist investors and the shareholders alike, Yahoo! Inc. (NASDAQ:YHOO)’s CEO could finally catch breath with rising share prices, thanks to the Alibaba Group Holding Ltd (NYSE:BABA)’s growing share prices. Jim Cramer called the spike in Alibaba Group’s share prices responsible for Yahoo’s recent success.
As per Cramer, Alibaba is likely to touch $110, currently trading at $98, and the shares of Yahoo “will go much higher” considering Yahoo’s 16.3% stake in the Chinese tech company. The only factor that worries Cramer is Yahoo’s strategy to handle the corporate taxes accompanying its stake in Alibaba. As of now, Yahoo’s share in Alibaba Group Holding Ltd (NYSE:BABA) is valued at $40 billion before taxes.
Cramer has been on Yahoo! Inc. (NASDAQ:YHOO)’s side for past several months and he considers Marissa Mayer, CEO of Yahoo, an efficient leader citing the fact that the share prices have moved to $42 from $15 when Mayer joined the company. Further, Mayer was successful in bringing the stock in mid 20 to high 20 range. It was Mayer’s insight to keep more than 100 million shares from the IPO, as she expected the Internet Company to go much further.
Cramer called Yahoo “an in transition company” and the CEO might go ahead with some potential acquisitions including Zillow Inc (NASDAQ:Z), Yelp Inc (NYSE:YELP), HomeAway, Inc. (NASDAQ:AWAY), and even Netflix, Inc. (NASDAQ:NFLX). Cramer called Yahoo! Inc. (NASDAQ:YHOO) a “cash machine” with the potential to buy back its stock and the conservative approach of the company is opposite to that of the market leaders including Google Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB).
Cramer believes that the current cash pile and capital of the company could help it push to the $60-mark. The shares of Yahoo! Inc. (NASDAQ:YHOO) are up nearly 11% year-to-date and nearly 40% in the last two weeks.
This article has been written by Prakash Pandey.