Yahoo! Made! $8bn! In! One! Day! And! You'll! Easily! Guess! How!

Plenty o' grog to drink from all thar Alibaba booty


Sprawling web souk Alibaba didn't see its stock-market debut go as planned on Friday.

It went much better.

The Chinese giant closed its first day on the US stock market with a share price of $93, up 38 per cent from its opening price of $68 per share. The offering netted the biz $21.8bn in investment, and marked the largest IPO in the history of the New York Stock Exchange.

The company had set $68 as the target price for its stock in hope that the offering would yield about $21bn. That goal was easily met on Friday and amid high demand the company saw its stock price soar in the early hours of trading.

Alibaba is now said to have a market cap of $231.44bn. By comparison, Apple's cap stands at $604bn, while Facebook, the previous IPO record holder, has a cap of $202bn. Amazon is around the $150bn mark.

Among those who will benefit most from the Alibaba windfall is Yahoo!. According to Team Purple's own finance site, Yahoo! stands to make $8bn today from selling off part of its 22 per cent stake in Alibaba. Yahoo! still plans to maintain a 16 per cent share in Alibaba following the stock selloff.

That cash injection dwarfs Yahoo! income from its own business, to say the least. The company in its latest quarter reported $1.08bn in total revenues and just $38m in GAAP income. The company's stake in Alibaba has long been cited as the only part of Yahoo! that generates a positive cash flow.

Now, it seems the Purple Palace is going to reap a nice windfall from selling off 121.7m shares in the Chinese web giant – although, it offloaded its Alibaba shares when the price was $68 rather than $93.

Shares in Yahoo! are trading at $40.93, well less than half the price of Alibaba. ®


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