Short squeeze from this point forward. Plus the market is coming back from its hiccup.
Let the stock and BABA glide up another 10% this month.
They are currently working to maximize it. The shares are locked up for the next 10 months anyways. The critical thing to remember here is that they are going to do it, and Starboard will force them to do it.
Expect all 38B in value and 12B cash to lure in other activists.
You are shorting a stock that is worth 60 bucks sum of the parts.
Want to short a company that is all smoke and hype? CMG!
So what if its not growing. Its very profitable.
PE of 20 assigned to 2B a year is $40 bucks right there.
And then you get 12B cash, 38B for BABA, and all of Yahoo Japan.
And the core business! All the BABA longs should be adding YHOO! Its BABA on sale!!!!
Now that the numbers are out the serious private equity folks are gonna prepare plans and offers
to extract the $30 of share value left on the table via split up, buy out and tax benefits.
So you get 39B BABA, 12B cash, and a core business that makes you 2B a year forever!
I think you could value that package conservatively at $80 a share! Here come the activists!
So $40 is the share price based on BABA being a 62 dollar stock not a 91 dollar stock.
Do earnings even matter? 32 cents? 29 cents? 34 cents?
The core business and yahoo japan and the cash are all valued at basically nothing.
I want MM to say she is in talks to reorganize or split up the company.
This is so prevalent, expect a big move AH because virtually anything positive she says, be it buyback, tax avoidance, dividend, etc will be positive.
As long as she does not intent to pay 10B for snapchat.
Snapchat is a fad and its user base have no money to use even if it did have ads.
Its not worth 500M let alone 10B.
And scenarios to get BABA shares direct to YHOO shareholders.
That unlocks $15 hidden value in the stock. Massive dividend. Each share holder of YHOO gets 1 BABA share for every 3 YHOO shares held.
Stock goes to 48 instantly. That is shareholder value, plain and simple.
If she would agree to a sale of the company or returning value to the share holders via distribution of BABA shares, we would see the stock nearly double. She would make a fortune and could buy all the purses and lattes anyone could ever buy.
YHOO is only up 60 cents.
Yet 5 bucks increase in BABA increases YHOO valued stake by 1.7B
This means YHOO has another 1 buck of value ready to spring out today! I expect a 40 close today.
They want to know the largest company in the world is a Chinese one. I see BABA at 250 in the next year.
YHOO is such a great store of value given BABA moving up.
There is no way around the fact that if done properly a takeover of YHOO gets any prospective buyer 38B in BABA stock, 10B in cash, YHOO Japan, and the core business that generates over 1B a year.
That and all of YHOO's other assets.
As BABA rises back toward 100, the pressure will increase for some sort of deal to be struck. The moment this is announced, and this value is unlocked, the stock instantly goes above 50.
Start buying calls. Thats my best recommendation to anyone out there looking to make a mint on this stock.
The market always finds a way to fill imbalances. 10B in cash, 36B in BABA, 7B in Yahoo Japan, and over 1B a year in pretax earnings.
As the smoke clears from this pullback, and people see their cash on the sidelines earning less than 1%, the move will be sharp and strong. I see YHOO over 60 once these talks get under way.