AOL — even after its quadrupling in the stock price in the last 15 months – still trades at a 6.14x Enterprise Value to EBITDA multiple. This is about half of the “industry” multiple of 11x. If Yahoo traded for a premium to AOL but still than industry EV-to-EBITDA multiple of 8.5x, its market cap would be $21.25 billion. Spread over 533 million shares, Yahoo!’s stock price would close 2013 at $39.87.
Note that this path to $40 is without any cash-rich splits. The risks of course are that Alibaba doesn’t IPO in 2013 and that Yahoo can’t come to an agreement with Softbank. Marissa Mayer might not be able to squeeze out an extra $500 million in EBITDA out of the company over the next year, in addition to EBITDA increases from a reduced headcount.