What’s left of the internet stock Yahoo! Inc. (NASDAQ:YHOO) in the wake of Alibaba Group Holding Ltd (NYSE:BABA) IPO is its sick advertisement segment which still hasn’t made a turn around. Mark Mahaney, the renowned RBC internet analyst shared his views on why he downgraded Yahoo! Inc. (NASDAQ:YHOO) to sector perform, on CNBC.
“[…] The major catalyst that you wanted on Yahoo! Inc. (NASDAQ:YHOO) is now come and gone that was the IPO last week, so now you have to look Yahoo fundamentally and the challenge is that the Display Advertising Segment which is the major you know, the reason left to own Yahoo fundamentally still hasn’t recovered, you know, after two years of efforts by the new management […],” said Mahaney.
While Mahaney downgraded the Yahoo! Inc. (NASDAQ:YHOO) stock, it fell to $38.95 at the ring of the closing bell, a decline of 2.33% for the day.
Technology stocks have been hit hard recently, especially the internet companies including Yahoo! Inc. (NASDAQ:YHOO) according to the CNBC correspondent. She asked Mahaney about his pick given the prevalent internet averse climate on the stock exchange.
Mahaney explained that there are still a lot of plays that look much better than Yahoo! Inc. (NASDAQ:YHOO) in terms of risk reward relationship because they have the catalyst that could lead to considerable growth of the company in the future. Yahoo! Inc. (NASDAQ:YHOO) too had this catalyst in the form of Alibaba’s IPO and the stock rallied up until mid September, but since the IPO, investors didn’t need to play Alibaba through Yahoo! Inc. (NASDAQ:YHOO) anymore and many of them fled the company.
Mahaney said that his pick among the internet stocks would be Facebook Inc (NASDAQ:FB). According to him the company has the right catalyst and there are doors to other sources of revenues, such as Instagram monetization, Video Ads, and a closing deal on Whatsapp acquisition, opening up.
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