If Yahoo ever decides to drop out of the tech industry, it seems that they could do quite well providing people with stock tips. They will be making an estimated $9 Billion when Alibaba launches on the New York Stock Exchange later this week. Yahoo currently owns about 22.5% of the company. They are under contract to sell 140 million shares when it goes public (this is a small fraction of what they own).
For those who follow the stock market, it is easy to see just how much money Yahoo has the potential to make here. Alibaba is poised to be one of, if not the biggest tech IPO in the history of the NYSE. Many experts believe that the price will launch between $60 and $66 per share, though some say it could rise significantly above that level because there is massive demand for this company.
Yahoo’s total ownership of the company is worth about $33 Billion given the estimated IPO levels.
In fact, much of Yahoo’s total value is due to their ownership in this company. Yahoo is estimated to be worth about $41 Billion total, with over half of that being from the Alibaba Company.
If you have never heard of Alibaba, think of it as basically the Amazon of China, only much much bigger. About 80% of all online shopping in China goes through Alibaba and their subsidiaries. In 2013, Alibaba had about $250 billion in sales. Amazon, on the other hand, had nearly $75 billion.
Most experts expect the bulk of the money that Yahoo makes from selling the required stake in the company to go back to investors. Yahoo shareholders are expecting at least half of this money to come to them, which would still leave a healthy amount for Yahoo to use for acquiring companies or investing in other ways. As we’ve all seen over the last couple years, Marissa Mayer, Yahoo’s CEO, loves making acquisitions, so it could be an interesting couple of months.
