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"[Yahoo] will have raised nearly $8.3 billion through the offering" If I'm reading that right Yahoo stands to triple their cash position almost overnight which today stands at around $4b.(1) Given Marissa Meyer's appetite for acquisitions this puts them into a potentially interesting new ballpark of scale. (1) http://finance.yahoo.com/q/bs?s=yhoo
You would have to consider the after-tax amount, which is going to be a bit less...around $5-6 billion.
Earlier quoted context omitted.
Alibaba sold a hell of a lot more than 0.1% of itself today. About 125 times that number. And the price wasn't driven to zero. There's a lot more depth in US equities markets than you think.
IPO is a special event. You can't compare it to a regular stock state.
2) Secondly, companies routinely do secondary sales in which they sell stakes of themselves far in excess of 0.1%.
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Why would that follow?
Because if all shares of the company is valued at X, and the tangible assets of the company are valued at Y, and X < Y, then isn't Yahoo's stock objectively undervalued? I'm not some sophisticated investor, I just buy index funds, but isn't this kind of objective valuation of companies the basis of value investing a-la Warren Buffet?
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You're right, I adjusted the numbers a bit. That leaves $9.7bn of free money laying around, if you can get at it. (minus taxes and discounts on the value, etc.)
You also forgot to include the money you have to pay for the lawsuits you will get for doing it. /j
Gosh....that's barely more than WhatsApp. Woulda done better selling it to Facebook. More seriously, the Economist put a valuation at $55-$120b. This puts it at $168b. Or 9 WhatsApps. The IPO was expected to raise $20b, so this is really good. It took 3 years after founding in 1998 to reach profitability. It defies most conventional notions of a startup, despite having started in somebody's apartment. It's unbelievab…
>It defies most conventional notions of a startup... It's unbelievably unfocused, it does pretty much every kind of business you can do on the Internet. It defies the Silicon Valley notion of startup. China's internet market is still new, and Alibaba is like Yahoo in the old days - it does everything online. Hopefully it doesn't turn out like Yahoo.
Alibaba going for a higher selling price just makes the continued undervaluing of Yahoo itself increasingly hilarious. At some point, I would think someone will want to buy them for all of this free money they have sitting around. YHOO market cap : 42.3bn + liabilities : 3.7bn = 46bn (to own outright) Meanwhile: Cash on hand = 1.1bn + Other assets = 15.3bn + Cash from Alibaba sale = 8.3bn + Value of remaining Alibaba…
Earlier quoted context omitted.
Because if all shares of the company is valued at X, and the tangible assets of the company are valued at Y, and X < Y, then isn't Yahoo's stock objectively undervalued? I'm not some sophisticated investor, I just buy index funds, but isn't this kind of objective valuation of companies the basis of value investing a-la Warren Buffet?
No, the discount is due to the fact that the market believes there is a risk that Mayer will misuse the money. More generally, no, you are not smarter than the market.
Alibaba going for a higher selling price just makes the continued undervaluing of Yahoo itself increasingly hilarious. At some point, I would think someone will want to buy them for all of this free money they have sitting around. YHOO market cap : 42.3bn + liabilities : 3.7bn = 46bn (to own outright) Meanwhile: Cash on hand = 1.1bn + Other assets = 15.3bn + Cash from Alibaba sale = 8.3bn + Value of remaining Alibaba…
Gosh....that's barely more than WhatsApp. Woulda done better selling it to Facebook. More seriously, the Economist put a valuation at $55-$120b. This puts it at $168b. Or 9 WhatsApps. The IPO was expected to raise $20b, so this is really good. It took 3 years after founding in 1998 to reach profitability. It defies most conventional notions of a startup, despite having started in somebody's apartment. It's unbelievab…
This is standard in China, as well as other Asian nations, which have high-context cultures[0]. People in high-context cultures value familiarity more than people in low-context cultures. What we see as a lack of focus is seen by Chinese consumers as part of Alibaba's value proposition.
0: http://en.wikipedia.org/wiki/High-_and_low-context_cultures