Yahoo! (YHOO) recently released its 10-K. In it, it updated the basic financials for Alibaba Group, of which it owns a 40% (fully diluted) stake.
On Page 82 of the 10-K, Yahoo! reveals that Alibaba Group’s grew to US$2.3 billion last year, from $1.3 billion in 2010, and $730 million in 2009.
That’s a 77% year-over-year growth in Alibaba revenues in one year.
For comparison, Facebook did $3.7 billion in revenues last year, which was up from $2 billion in 2010 and $777 million in 2009.
So, Facebook grew revenues by 85% last year.
Facebook is reportedly worth $100 billion, giving it a trailing price-t0-sales ratio of 27x.
At that same ratio, Alibaba Group would be worth $63 billion.
Now, Alibaba is growing at a slightly slower rate than Facebook. Therefore, let’s be conservative and deflate Alibaba’s implied market valuation down to $57 billion.
Ma needs help funding this buyout. I think PE wants a little more than he wants to give. I think Ballmer and Ma could come to terms. Microsoft then would own a part of Alibaba, say 10-15%, all Yahoo patents, search and have a stronger hold on Facebook. Am I the only one that has this opinion? What is Ballmer waiting for???
Yahoo can wait longer than Jack Ma and Jack Ma knows it. Jack Ma might take Alibaba Group public this year but no later than next year.
The company is reportedly trying to strike a Yahoo deal that would value it at $32 billion or more, and with these kinds of financials and general market hype created by founder Jack Ma, it’s looking like he might actually get that valuation or even higher. He and his team have always hinted they think they should be valued in the same neighborhood as Baidu (Nasdaq: BIDU) and Tencent (HKEx: 700), China’s 2 most valuable Internet companies, now both worth about $48 billion. A group listing would certainly come close to helping him reach that target.
Bottom line: The release of group-level data on Alibaba’s rapid growth is the latest indication the company is weighing a potential listing of the entire group either this year or next.
"Once Alibaba Group goes public Yahoo will trade for $30."
Mr. Ma has been abundantly clear on this point. Alibaba is NOT going Public until he receives what he demands from Yahoo!!!
In other words, until Yahoo meets his Demands, do NOT expect Yahoo to see $30 anytime soon.
In fact, do NOT expect Yahoo to see $16 anytime soon!!
NOW do you know why Mr. Jack Ma RULES!!!
So, here’s the math on Yahoo!:
- Alibaba Group stake: $22.8 billion
- Yahoo! Japan stake: $6.5 billion
- Cash on hand: $2.5 billion
- Yahoo! core business: Dan Loeb says it’s worth 7x EBITDA which was $1.5B last year but will be substantially more post-layoffs – let’s assume $2B x 7 = $14 billion
- Yahoo! patents: ? – although if Yahoo! struck the same deal for preferred stock with Facebook as they did with Google (not including other potential patent deals), it would be worth $4.5 billion
- Total sum-of-the-parts (not including patents): $45.8 billion or $37.85/share (157% above today’s price).