Boston, MA 10/30/2013 (wallstreetpr) – From a low of almost $18 during the last one year, shares of online giant Yahoo Inc (NASDAQ:YHOO) has moved up to touch a high of $35 in recent times. But though many people are assigning this market success to Yahoo’s head, very few understand that it is rather its investment in a Chinese giant which is causing this optimism to build up in Yahoo’s stock.
As of now, Yahoo has a significant minority stake in Alibaba. Yahoo owns more than 24% of Alibaba, which is considered to be a combination of Amazon, PayPal and eBay, but operating out of China. And though Yahoo has been a major partner for Alibaba in past few years, Alibaba’s performance cannot be compared with that of Yahoo at all. Limited results which Alibaba declares tell that its net income have gone up by almost 150% quarter on quarter over revenue increase of almost 60%. It is this size and the pace at which Alibaba is growing that is helping Yahoo. If sources are to be believed, then investors are eagerly awaiting Alibaba’s IPO offering, which by many is expected to be one of the most eagerly awaited IPOs in China during last few years.
There were fears in some sections that Yahoo might exit the company completely. But Yahoo’s stock got a bump up when it was disclosed that it was not required to sell most of its stake in Alibaba. And this has been one of the major reason behind Yahoo’s shares’ 100 percent return in last 12-15 months.
Bernstein has upgraded Yahoo to Outperform estimating a per share value addition of $24 for Yahoo once Alibaba gets listed. It seems that it may not be very far of in future that Alibaba would go public. And when it does, Yahoo investors can very well expect to be rewarded for their patience.
