Yahoo's Remaining Stake In Alibaba Could Be Worth Its Current Market Cap By Next Year
Yahoo‘s (YHOO) stock has been on a run in the last 3 months – at least by Yahoostandards. It’s up 21% over that time, while the Nasdaq has dropped 4.6% Yahoo is not dead money.
Its current market capitalization is $21 billion.
At the moment, Yahoo consists of its core business that new CEO Marissa Mayer has been focusing on improving, its 35% stake in Yahoo Japan, and its remaining 24% stake in Alibaba Group.
Yahoo’s got $5B in cash (after they pay the IRS taxes on the first Alibaba stake sale). Its Yahoo Japan is worth $4.1B (post-tax). And its Alibaba stake is worth $6.9B (post-tax) using that group’s last private round of financing just below $50B.
Meantime, Yahoo’s core business generated $1.3B in EBITDA last year. If you assigned it the same enterprise value to EBTIDA valuation that AOL (AOL) has, the core business is worth $7.8B.
Add it up and you’ve got a collection of assets (post-tax) worth $24B, which is still more than the current market cap. To get to an AOL-type “fair” valuation, you’d need to see the stock rise to $20/share at the current share count.