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Yahoo! Inc. (YHOO) Skips the Downswing Caused by Alibaba Group Holding Ltd (BABA) ‘s IPO

The swelled up Alibaba Group Holding Ltd (NYSE:BABA) IPO is having an interesting effect on other high momentum stocks in the technology and social media sectors, apart from Yahoo! Inc. (NASDAQ:YHOO) of course. This interesting drop phenomena was explained on CNBC.


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Stocks such as Facebook Inc (NASDAQ:FB) saw a considerable drop in their stock prices. In fact Facebook Inc (NASDAQ:FB) was the biggest loser in this category as its stock price has plummeted about 4%. The reason being that portfolio managers want to make room in their portfolios for Alibaba Group Holding Ltd (NYSE:BABA). Hence they are reducing their position in the high momentum technology and social media stocks.

These are also the same stocks that Fed pointed out in its monetary policy in July, according to CNBC. They were cited with reference to being possibly overvalued by the market. Hence, it is no surprise that portfolio managers have decided to jump ship. Yahoo! Inc. (NASDAQ:YHOO) although being a technology and internet based stock itself, hasn’t faced the same fate as its competitors which is because of its stake in Alibaba Group Holding Ltd (NYSE:BABA). In fact, investors who wanted to play on Alibaba Group Holding Ltd (NYSE:BABA) when the details of the IPO were not very clear went on to buy from Yahoo! Inc. (NASDAQ:YHOO) instead.

Yahoo! Inc. (NASDAQ:YHOO) has a major stake in Alibaba Group Holding Ltd (BABA) which has grown even more in value as the news about Alibaba Group Holding Ltd (NYSE:BABA) raising the price of the IPO hits the market. CNBC reported that the new price range for the already world’s largest IPO is going to be between $66 and $68 owing to strong demand for the Chinese e-commerce giant.

Yahoo! Inc. (NASDAQ:YHOO) is set to receive a considerable amount of cash as it plans to sell some its stake during the IPO. It is hard to exactly pinpoint the amount of cash injection that Yahoo! Inc. (NASDAQ:YHOO) is looking at during this IPO as it depends on the company’s management and especially Yahoo! Inc. (NASDAQ:YHOO)’s CEO, Marissa Mayer’s decision regarding the quantity of stake to be sold. To get some perspective on this we can consider that Alibaba is looking to raise about $22 billion at the higher end of the IPO price range. This could even rise to $25 billion if the underwriters exercise their right to sell additional shares, according to CNBC.

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