3 ms·

The yahoo dip is even larger, considering yahoo's stock is primarily Alibaba. If it were split into two companies the dip would likely be >20%.

evanelias 10y ago
True, but BABA is also down 2.5% today on its own, probably due to concerns about the impact of rising US interest rates on China's economy and debt. Drops in BABA's share price tend to be mirrored in YHOO's, so that's responsible for a decent portion (albeit less than half) of today's dip.
nostrademons 10y ago
Other sources [1] estimate the impact on Yahoo's core business, after subtracting out Alibaba's stock movements, at about $1.3B. On a $4.8B deal, that's about 27%. [1] https://www.bloomberg.com/gadfly/articles/2016-12-15/yahoo-s-cyberfail-could-cut-1-billion-from-verizon-deal https://www.bloomberg.com/gadfly/articles/2016-12-15/yahoo-s...
- dmurray 10y ago
  Other sources [0] say Yahoo's core business is negatively valued. How much worse could this make it? [0]http://www.investopedia.com/stock-analysis/070215/why-yahoos-core-business-negatively-valued-baba-yhoo-goog-amzn-fb.aspx http://www.investopedia.com/stock-analysis/070215/why-yahoos... from April, but the prices haven't moved too much since.
  - nostrademons 10y ago
    If buying IP means that you're buying a codebase so full of security holes that it'll likely result in a billion dollars worth of lawsuits in the future, a billion dollar drop in valuation is rational even if the existing valuation is negative.
  - eropple 10y ago
    Consider how one sometimes says "the chairs in the building are valued higher than the stock"--like, it's so low that the actual stuff they have is worth more than that even after liabilities. Now light the chairs on fire. It can get worse.
- spoinkaroo 10y ago
  The drop seems excessive to me, even taking into account BABA's daily performance. Bought some shares but didn't bother hedging against BABA so it's essentially an investment in BABA and baby arb, would definitely look into more serious hedging if I were managing more capital.

evanelias 10y ago

True, but BABA is also down 2.5% today on its own, probably due to concerns about the impact of rising US interest rates on China's economy and debt. Drops in BABA's share price tend to be mirrored in YHOO's, so that's responsible for a decent portion (albeit less than half) of today's dip.

nostrademons 10y ago

Other sources [1] estimate the impact on Yahoo's core business, after subtracting out Alibaba's stock movements, at about $1.3B. On a $4.8B deal, that's about 27%. [1] https://www.bloomberg.com/gadfly/articles/2016-12-15/yahoo-s-cyberfail-could-cut-1-billion-from-verizon-deal https://www.bloomberg.com/gadfly/articles/2016-12-15/yahoo-s...

dmurray 10y ago
Other sources [0] say Yahoo's core business is negatively valued. How much worse could this make it? [0]http://www.investopedia.com/stock-analysis/070215/why-yahoos-core-business-negatively-valued-baba-yhoo-goog-amzn-fb.aspx http://www.investopedia.com/stock-analysis/070215/why-yahoos... from April, but the prices haven't moved too much since.
- nostrademons 10y ago
  If buying IP means that you're buying a codebase so full of security holes that it'll likely result in a billion dollars worth of lawsuits in the future, a billion dollar drop in valuation is rational even if the existing valuation is negative.
- eropple 10y ago
  Consider how one sometimes says "the chairs in the building are valued higher than the stock"--like, it's so low that the actual stuff they have is worth more than that even after liabilities. Now light the chairs on fire. It can get worse.
spoinkaroo 10y ago
The drop seems excessive to me, even taking into account BABA's daily performance. Bought some shares but didn't bother hedging against BABA so it's essentially an investment in BABA and baby arb, would definitely look into more serious hedging if I were managing more capital.