Yahoo! Inc. (NASDAQ:YHOO) is trading at levels that it haven’t been seen in nearly 14 years and Alibaba Group Holding Ltd (NYSE:BABA) seems to have at least some sort of involvement in putting a smile on Yahoo’s CEO, Marissa Mayer’s face. In an article by John Jannarone on CNBC, the author shed some light on the Chinese e-commerce’s role in Yahoo! Inc. (NASDAQ:YHOO)’s fortunes.
Just to provide a quick recap of the situation, the marriage, and the honeymoon that the two companies seem to be on currently, let us have a quick look at their stock prices. Ladies and gentlemen, Alibaba Group Holding Ltd (NYSE:BABA) has entered the building or more precisely the party of stocks trading above $100. It is now trading at $100.13. Yahoo! Inc. (NASDAQ:YHOO) on the other hand is dressed up pretty well for the party as well, which it will attend as Alibaba’s plus one, and is currently trading at $45.87.
The first way in which Alibaba Group Holding Ltd (NYSE:BABA) is influencing Yahoo! Inc. (NASDAQ:YHOO)’s stock is pretty obvious. It has 15 percent stake in the Chinese e-commerce giant, according to Jannarone. However, as the author explains, this only accounts for $4.54 rise in Yahoo’s shares since Oct. 16, of the total gain of about $7.82.
The other significant component of Yahoo! Inc. (NASDAQ:YHOO)’s recent surge is the tax advantage that many investors sense that the company might be benefitting from. This tax benefit revolves in divesting its shares in Alibaba Group Holding Ltd (NYSE:BABA) and Yahoo Japan.
The article quoted Piper Jaffray as putting Yahoo! Inc. (NASDAQ:YHOO) in the $56 range assuming that it doesn’t have to pay any taxes and at $41 per share, if it is to pay taxes on its holdings in the two companies at a 38% rate.
Either way, the valuation of Yahoo! Inc. (NASDAQ:YHOO)’s core business operations has little to do with its current honeymoon on the Stock Exchange.
Let Warren Buffett, David Einhorn, George Soros, and David Tepper WORK FOR YOU. If you want to beat the low cost index funds by an average of 6 percentage points per year look no further than Warren Buffett’s stock picks. That’s the margin Buffett’s stock picks outperformed the market since 2008. In this free report, Insider Monkey’s market beating research team identified 7 stocks Warren Buffett and 12 other billionaires are crazy about. CLICK HERE NOW for all the details.