Yahoo! (YHOO) Shares Down On Alibaba IPO

October 29, 2007 by Douglas A. McIntyre

Buy the rumor, sell the news. Maybe. Word that Chinese e-commerce company Alibaba is going public and raising $1.5 billion has not helped Yahoo! (YHOO). The US portal company owns 39% of Alibaba, which should be worth about $3,5 billion. That is close to 10% of Yahoo!’s market cap.

But, the trouble may be that the time to sell the shares is right after Alibaba goes public, Yahoo! is not selling its shares. Instead, it is putting another $100 million into the IPO. Since it does not appear that Alibaba has an overriding strategic interest for Yahoo!’s efforts in China, the whole thing seems a bit daft.

Yahoo!’s shares are off well over 4% today. Not much IPO celebrating there.

Douglas A. McIntyre