Alibaba shares are up, Yahoo shares are down. How is Yahoo — which owns nearly a quarter of Alibaba — being affected by Alibaba’s IPO today?
In the run-up to the Alibaba IPO and Yahoo’s expected windfall, the Silicon Valley company’s shares had risen 20 percent in the past three months. But as Mike Murphy wrote in Biz Break, investors started cashing out yesterday. And Yahoo shares are down about 3.5 percent today.
What will Yahoo, which has struggled to compete against Google, Facebook and others, do with the billions of dollars it’s reaping from the IPO? The company has said it will return some of it to shareholders. Regarding the rest, there’s speculation galore about buying companies such as AOL, and other “irresponsible” things Yahoo could do with that money.
Analysts quoted in the many stories being written about Yahoo and Alibaba say Yahoo CEO Marissa Mayer will now be in the hot seat. (As if she hasn’t already been there since becoming CEO a couple of years ago.)
“There will be mixed emotions,” said Sameet Sinha, an analyst at the investment firm B. Riley and Co., according to CNet. “Marissa will be happy, but there will be a lot of pressure.”
Anyone paying close attention to Yahoo knows that for the past few years, its allure to investors has been its stake in Alibaba. (It certainly hasn’t been its flat growth or revenue.) Now investors can buy into Alibaba shares themselves. That’s why what Yahoo does with its windfall, what it does on its own, is so important.
And the speculation doesn’t stop at who Yahoo will buy. How about who might buy it? As we wrote earlier today, Bloomberg asked Alibaba Chairman Jack Ma whether he’s interested in buying Yahoo. He laughed and said no.
Photo by Gary Reyes/Mercury News archives
