Yahoo! Inc. (NASDAQ:YHOO) investors have become a troubled lot after Alibaba Group Holding Ltd (NYSE:BABA)’s United States stock exchange debut last week. Though the company gained over $9 billion from selling some of its shares in Alibaba during the latter’s initial public offering, it is unclear if the amount would be sufficient to put the struggling company back on its feet and fight competition from strong rivals such as Google Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB). Neil Doshi, Managing Director of CRT Capital Group, expressed his opinion about the right trade for Yahoo on CNBC.
When Doshi downgraded Yahoo! Inc. (NASDAQ:YHOO) during mid-July, its stock was trading at $35.61 and currently, it is around $3.5 higher, trading at around $39 per share. But it saw a temporary high tide prior to Alibaba Group Holding Ltd (NYSE:BABA) going public. He felt that Yahoo might be a loss for investors in the long run. “Maybe you make a little bit of upside over the next six months but over the course of the year, that trade really starts to unwind,” he said.
Doshi also said that Yahoo! Inc. (NASDAQ:YHOO) chief Marissa Meyer’s efforts to bring her company back to its former glory are not producing any positive results as Yahoo’s core assets continue to decline. The California based software giant’s numerous acquisitions aren’t showing signs of taking off. Over the past year, investment into the company was greatly fuelled by the need for American investors to get a piece of the Chinese e-commerce pie that was Alibaba Group Holding Ltd (NYSE:BABA). Now that Alibaba has been listed publicly, such investors might be planning to sell their stake in Yahoo. “The big trade has been to own Yahoo to be able to get into Alibaba and my guess is a lot of people who got their allocations probably started selling off their Yahoo shares,” he elucidated.
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