Yahoo! Inc. (YHOO): What Valuation Will the Alibaba Group Command on its IPO?


Yahoo! Inc. (NASDAQ:YHOO) and the Alibaba  Group are all over the news as the IPO for the Chinese e-retailer approaches fast, but how much is the Alibaba Group really worth? Well, the pricing of the IPO suggests the company is valuing itself at nearly $160 billion, if experts on the Street are to be believed, the company will be valued at above $200 billion when it gets listed. That must make Yahoo! Inc. (NASDAQ:YHOO) shareholders really happy as the company holds over 20% stake in the Alibaba Group. Carlos Kirjner, Senior Analyst at Bernstein, was on CNBC recently, discussing what the Alibaba Group’s IPO will do to the overall market.

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“Well we believe that the company is worth at least $200 – $210 billion, which we think would be between $80 and $85 a share […] it’s unclear that people will shift money primarily from Amazon and eBay. Many managers have limitations on how much they can allocate to China, but we believe that the Internet wave is here and this company will always going to be valued highly and will increase in value, going forward,” Kirjner said.

Kirjner feels that since the Alibaba Group has made a lot of necessary disclosures in its F-1s filings with the Securities and Exchange Commission regarding the company’s structure and the ownership of its assets and relationships, the company’s valuations at its IPO won’t be affected.  He believes that the kind of potential that the Alibaba Group has, it will continue to be the dominant e-commerce business in China and the largest e-commerce business in the world. He considers the Alibaba Group’s investments in diversified areas as a major positive for the company, instead of something that will make its future investors skeptical. Yahoo! Inc. (NASDAQ:YHOO)’s stake in the Alibaba group can be worth over $40 billion, its current market cap, if the Alibaba Group gets a valuation of $200 billion on its debut.

As of June 30, 2014, D.E. Shaw‘s firm D.E. Shaw owns over 16 million shares in Yahoo! Inc. (NASDAQ:YHOO).

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