Feb. 12 - Alibaba is worth $128 billion according to Reuters calculations. That means Yahoo, which owns a big stake, is overvalued, according to an analyst. Fred Katayama reports.
One reason investors have been giddy about Yahoo's high-flying stock is its big stake in Chinese e-commerce giant Alibaba. But that stake may be worth less than analysts think. Reuters calculates that Alibaba is worth $128 billion, roughly $12 billion less than Wall Street estimates. Alibaba was valued at $32 billion when video game company Giant Interactive bought a $50 million stake three years ago. Giant sold its stake Tuesday for nearly $200 million. Assuming Giant's stake hasn't changed, that implies that Alibaba's worth has quadrupled to $128 billion, according to Reuters calculations. Yahoo owns one-fourth of Alibaba. Bernstein senior analyst Carlos Kirjner calculates that if Alibaba is indeed worth about $130 billion, that would suggest it contributes $18 to Yahoo's share price. That, combined with Yahoo's core business, cash, its micro-blogging unit Tumbler, and its stake in Yahoo! Japan, adds up to a fair value of $35, he figures. That would be 9 percent below Yahoo's closing price on Tuesday. Yahoo's stock, which doubled last year, dipped at the start of trading. The company is currently valued at $39 billion.