On February 4, 2013, I wrote an article titled "Yahoo May Be A Nice Way to Participate in the Alibaba IPO." Shortly thereafter, Cantor Fitzgerald upgraded Yahoo (YHOO) stating:
"The analysts raised their target price for YHOO to $26 from $21, after adjusting the Alibaba/YHOO Japan valuation on new disclosures."
Barclays Capital also issued an upgrade stating:
Alibaba's valuation has probably risen to $55 billion from the $40 billion at which the company raised capital back in Q3 of last year, writes DiClemente, increasing the value to YHOO! by $2.23 billion to $8.98 billion.
CNBC even highlighted the issue on Squawk in the Street.
"Barclays upgrading YHOO saying markets underestimating the value of the stakes in Alibaba"
The Barclays article defines an estimated value for the YHOO Alibaba holdings of $55 billion, up from $40 billion in Q3 2012. That is a 37.5% increase in less than one year. It also states the increase to YHOO being between $2.23 billion and $8.98 billion. YHOO has 1.1 billion shares outstanding, so the value per share is between $2.00 and $8.16, a wide range yes, but a wide range on the upside. It is worth noting that the Cantor Fitzgerald estimate was increased by $5 from $21 to $26, which is essentially the mid-point between Barclays' estimate of an increase of $2.00 to $8.16.