If there was no real substance then yahoo would be sold by the people who bought in the last few days and the money would be moved to other stocks. The fact that it is up - indicates that there are some big players who believe it is going much higher. They must see there is more upside or it would follow the market - or even slide further than the market given the run-up. The fact that shes up is very telling of higher highs to come.
I think they need to start consolidating gains in the areas they are in. If they keep trying to branch out into too many different areas they will get burned.
I would not be so sure. As far as BABA buyout is concerned, that won't happen until after the IPO. Before that would likely be another reduction in the amount of shares yhoo would have to sell at IPO to even further reduce TAX burden. The only real possibility is that Microsoft steps in with an offer before the IPO. A MSFT bid is the only real serious possibility before the BABA IPO. It would also be tricky as the IPO value could end up being much higher than the $150 billion estimates - so what does MSFT do? Do they go really high? Do they do a mostly Share offering to cover the potential IPO gap up meaning having to come back and offer more? It's a complicated buy before this IPO.
Less shares available on the market in the first few days would be a good thing - if the demand is high and the supply low - the IPO could go way past what would be normal. This is also something BABA would want. Why do you assume they are required to make up what was offered before?
Apple is unlikely just because it's mostly hardware - it would be a hard fit. GOOG would like to dominate the market - but there would be significant regulator pressure. Amazon is a little unlikely also. Of all of them Microsoft is the most likely - it's stock and cash balance is nearing all-time highs. It's getting very aggressive with the new CEO. I am sure it would like to take a bite out of BABA on the back end to. MSFT could take Yahoo and have a bit road into China and increase it's mobile content. Of any the only one I would give any serious thought to would be MSFT. But from a tax savings idea a BABA buyout makes the most sense. It's just a matter in MSFT wants to get it's hands in there even with the tax issues.
In the next 3 weeks - It is my belief Yahoo will announce they have been "granted" the right to significantly reduce the shares of BABA to sell. This will happen just a few days before the official BABA IPO date is announced. You will then see a spike in YHOO to $45+ as the buyout will be a lock. How much higher YHOO goes from there all depends on how the IPO goes. Just don't expect a announcement in the next few days, that is unlikely. It will most likely happen very close to the IPO's release date published.
Going through upside resistence levels on heavy volume and not selling off almost always leads to a move higher or at least a new short-term base.
No - a buyout cannot happen from BABA until after the IPO - only from another party like MSFT - and that is a wildcard - unless someone else wants to take a big chunk of control of BABA.
The only after hours news that could send the stock flying before the IPO - other than another buyer - would be another reduction in the amount of shares Yahoo has to sell.
If They reduce to under 70 - 100 million shares to sell - then you know the buyout by BABA is almost a lock. That would send the shares up 20%+
Without high vol - I would discount the rumors - but vol is double the avg and getting close to just after earning volume. Plus it is starting to sink in that the downside profit potential to be short is small - while the upside is huge. There is 50% upside quite likely and 10% downside at max before Oct without a market collapse. You can't find that risk/reward payout in very many large cap stocks these days.
Being short is a fools game - while very short term - a few weeks it could pay a 10% return - there is a good chance for 50 to 100% upside depending on how crazy the BABA IPO goes. Generally after labour day(target for IPO) there is a upswing in the market. I can easily see BABA getting a $250 bln market cap in short order(mostly due to mainland China retail investors) If between now and the IPO there is another reduction in the amount of shares Yahoo has to sell - then the buyout deal is pretty much a given. On that day you could see a 20% spike in YHOO alone. There are away better shorts out there then this one. I can't believe there would be any "smart money" shorts left at this point.
Yes this is significant vol - 60 min of trade and 13 million shares - of course it will drop off - but even at half the pace it would be a massive vol day.
Well It appears that someone at Forbes magazine can up with the same idea/question around 2:30 this afternoon :)
It's funny I made this post more than a week ago and here it pops up on Forbes today.
It's an interesting possibility. Lets say Alibaba gets to the $250 billion market cap - it could then turn around and buy up Yahoo for the most of the other shares outstanding. Plus they could buy out Softbank Japan as well - I'm sure the Chinese would love to do that.
I wonder what the purchase price would be?
Really? Given the track record that was not something people should have expected. What was good was they ONLY missed by a small amount - a penny and 40 million on revenues - that is really insignificant. This is all about the IPO now. Upside from here is all dependent on how high ALI goes - I think it will hit $250 billion with Chinese investor buying - so that will take Yhoo much - higher.
Before I thought it could hit $50-$60 - but with these results I am thinking $45 to $50
The range was for a low of $0.32 up to $0.42
This is all about the Ali IPO - core does not matter to the street
I still say the IPO will be above $200 billion - giving Yhoo at least $40 billion return - that is more than the current market cap
$3 billion of cash + $9 for Japan + $40 for Ali = $50 plus per share
Now having to sell less they may only need to pay $5 billion tax - so we are looking for $45ish per share after the IPO
Worst case is $40 per share after the IPO or 15% upside
Well I think the closer number is 24% - but whatever.
The key is how much the IPO will be pumped up - remember this will be the biggest IPO ever - the market makers and pumpers will want to make sure it gives the illusion of doing really really well. Add in that Chinese investors will be buying it because they can only access it through the US market = a massive untapped group of first few days IPO buying frenzy.
Watch I believe that within the first week of the IPO it will easily hit the $250 billion mark due to Chinese stock buyers. How long it stays there I don't really care - if it take YHOO up to $50+ then that is a great time to start selling.
Basically there is very little downside to yhoo here - at most 7-10%
Upside is as much as 100% in a crazy upside down market - but more like 40 to 50%ish
I will be looking to exit in the $50 dollar range and get ready for a big drop in the market sometime after Sept/Oct
I think the drought in many places in the US will really put a hurt on the American consumer during the winter with higher food prices.
Of course the US gov't likes to say that food/fuel inflation is "variable" - long-term it's not - food prices are going up buy double digit percent for years.
Employment has not gotten better in the US - half of the jobs that the gov't claims have been "replaced" - have been replaced by jobs that a part-time/no benefits and half the wages - those people are going to be hit hard by rising food prices.
It is pretty clear that if there is no major down turn that the IPO will probably give a value to Ali @ $250bln range - I think people are just undervaluing to pick up Yahoo on the cheap.
I have little doubt that they will use Ali as a pump vehicle to show the "masses" that the IPO market and hence the stock market is still in "Rally mode" by making the IPO go up 30-50% in the first few days.
So I would say Yahoo gets $20bln from the sale (12%) and a few days later is left with $30bln(12%) for a total of $50 bln
$50bln + 10Bln for Japan + $5 of other assets(cash) = $65bln and nothing for core
That would give Yahoo as price of about $65 per share after the IPO
Although I expect it to top out in the $50 to $60 range - anywhere in this range would be a SELL - but that is still 50%+ upside from here.
Only thing that could derail this 1)Bad market during the IPO 2)bad numbers on Tues 3)a war in middle east(etc)
People keep calling for a correction - but I don't think the people who run the markets have sucked in enough "retail/dumb" money yet - most of the gains are on the backs of the rich paying with the rich - markets top usually with the retail/dumb money last.
Yes Iranian Guard troops will be "securing" the Iraqi capital from insurgent attacks!! For 10 years of war they dreamed of capturing the Iraqi capital - and now the Iranians get invited in - oh how times change.