September 22, 2014 0 Comments
Last Friday, Alibaba, the Chinese ecommerce giant, closed on the New York Stock Exchange at $93.89 or 38% percent higher from its IPO price. Alibaba raised a record-breaking $21.8 billion and the company’s valuation closed at $237.7 billion. Yahoo, which sold more than 120 million of its 524 million shares, made $8.27 billion and still has remaining stake in the company valued at around $38 billion. So how did Yahoo’s shares dip 2.7% during Alibaba’s first trading day? Analysts are suggesting that investors previously bought Yahoo shares as a way to own a piece of Alibaba. Yahoo was always seen as a temporary stock for many of these investors as they waited for the sought-after Alibaba IPO. Now that Alibaba is available to investors, the market in particular those Alibaba investors, have begun reviewing Yahoo’s core business. Yahoo has been struggling for years, and if its revenue growth is not rectified soon, the value of its core business may sink even further.
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