Yahoo! Inc. (NASDAQ:YHOO) may be too risky in connection to the coming Alibaba initial public offering, Gordon Chang said in a recent interview on Fox Business Network. Furthermore, he went as far as to say that Tencent Holdings Ltd is better than Alibaba.
The comment from Chang, author of the book The Coming Collapse of China, comes after others have signified confidence in Yahoo! Inc. (NASDAQ:YHOO) exactly because of its stake in Alibaba in the context of the Chinese company’s imminent debut. For example, Gene Munster, Piper Jaffray Companies (NYSE:PJC) senior analyst, said in a recent interview on CNBC that as the Alibaba IPO draws near, investors are effectively going to drive up Yahoo’s stock value.
Chang, on the other hand, points to risks in Alibaba and in effect, Yahoo! Inc. (NASDAQ:YHOO). He told Charles Payne:
“Alibaba is a Chinese e-commerce play when Chinese consumption is stalling. The company’s market share has topped off and growth is stalling. Its main competitor, Tencent Holdings, is a better company. It’s better-managed and an easier path to success. The Chinese supreme court has declared Alibaba’s corporate structure illegal and Jack Ma who’s the company’s leading light now think he is a rock star. He is making bizarre acquisitions. Apart from that, there’s nothing to be concerned about…[Jack Ma] is very wealthy but the problem is that it’s all going to his head and what he has been doing recently were these acquisitions that is making Alibaba a different company. Everybody looks at e-commerce in China and says, ‘I want a part of that,’ but he’s changing the nature of the company with these $6 billion in acquisitions this year.”
Watch the video below where Tencent, WeChat and the Chinese government were also discussed.
Yahoo! Inc. (NASDAQ:YHOO) investors includes James Melcher’s Balestra which reported 550,000 shares in the company by the end of the first quarter. That stake was valued at about $19.75 million. Another investor is 40 North Management managed by David S. Winter and David J. Millstone which reported, also by the end of March, a stake comprised of 493,195 shares with a value of about $17.71 million.