Mon, Mar. 16, 10:56 AM
- Alibaba (NYSE:BABA) is up sharply in early trading after Chinese premier Li Keqiang suggested (amid slowing GDP growth) fresh stimulus efforts will be launched if needed, sparking a 2.1% overnight rally for the Shanghai exchange. Yahoo (NASDAQ:YHOO) is naturally following Alibaba higher.
- The gains come two days before a massive 437M-share lockup expiration arrives. 100M of the shares are subject to employee trading restrictions that will remain in place until Alibaba's FQ4 report (expected in May) is released.
- Short-covering could be aiding today's gains: Alibaba had 56.9M shares shorted as of Feb. 27, the highest figure recorded since a September IPO in which 368M shares were sold.
Wed, Mar. 4, 1:58 PM
- A day after slumping to new post-IPO lows and coming within $0.03 of $80, Alibaba (NYSE:BABA) has seen dip-buyers emerge in large numbers. Naturally, Yahoo (NASDAQ:YHOO) is along for the ride.
- The gains come as a Chinese publication reports Jack Ma once said he considered acquiring Yahoo, which plans to spin off its Alibaba stake into a publicly-traded company in Q4. Ma's alleged comments: "The acquisition of Yahoo is something I worked [on] a couple of years ago, this is a political problem, not an economic problem, Yahoo is a media [company], more sensitive."
- There has already been speculation Alibaba will try to buy Yahoo's spinoff (much less politically challenging than buying the whole of Yahoo) at some point. Bloomberg's Matt Levine has noted the spinoff will have to wait a year before a deal occurs, in order to maintain its tax-free status.
- Meanwhile, Alibaba's Aliyun cloud services unit (a giant in the Chinese cloud infrastructure market) has opened a Silicon Valley data center, its first in the U.S. For now, the data center will cater to Chinese companies with U.S. operations, but it plans to go after non-Chinese clients later this year. When it does, Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and a slew of other incumbents will be waiting.
Tue, Mar. 3, 1:46 PM
- Alibaba (BABA -3.3%) has slumped to new post-IPO lows on a down day for equities, and at one point was just $0.03 above $80. Shares remain 19% above their $68 IPO price.
- Yahoo (YHOO -3.8%), which has seen the value of its 384M-share Alibaba stake (set to be spun off) fall to $31.1B, is following Alibaba lower. Yahoo's market cap stands at $41B.
- Possibly hurting Alibaba: The WSJ has taken a look at the use of fake orders (i.e. "brushing) by Alibaba merchants to pad their sales and thereby boost their standing on the company's marketplaces.
- Merchants pay "brushers" to place orders, and then ship them boxes that are empty or full of worthless items. A November column from China's state-owned Xinhua News Agency estimated 17% of sellers (1.2M) on Alibaba's Taobao site (focused on smaller merchants) had faked RMB10B ($1.6B) worth of transactions in 2013.
- Alibaba says it punishes sellers found to be faking transactions, and analyzes IP and mailing address data to spot anomalies. Chinese regulator SAIC recently issued a report criticizing Alibaba for fake goods listings and other illegal business done on its sites, but backtracked after Alibaba blasted the report.
- The Chinese e-commerce giant now trades for 28x estimated FY16 (ends March '16) EPS. The FY16 revenue growth consensus is at 36%.
- Update: Bloomberg suggests JD.com's strong Q4 numbers could be fueling concerns Alibaba is losing share. JD's GMV rose 119% Y/Y in calendar Q4 to $13.8B; Alibaba's rose 49% to $125.9B.
Thu, Jan. 29, 9:37 AM
- Alibaba's (NYSE:BABA) FQ3 GMV rose 49% Y/Y to RMB787B ($125.9B). However, its monetization rate (revenue as a % of GMV) fell 35 bps Y/Y to 2.7%, leading revenue growth to only reach 40%. By contrast, monetization rate fell just 1 bps (to 2.30%) in FQ2.
- A major culprit: Mobile grew to 42% of GMV from 36% in FQ2 and 20% a year ago. And the mobile monetization rate (1.96% vs. 1.87% in FQ2 and 1.12% a year ago) remains well below the total rate. Mobile was 30% of revenue vs. 42% of GMV.
- A bright spot: EBITDA rose 34% Y/Y to $2.43B, better than expectations for 24% growth and driving the EPS beat. Heavy spending led EBITDA margin to slip to 58% from 60% a year ago. With stock compensation spend (IPO-driven) rising to 16% of revenue from 4%, and new business initiatives growing, operating expenses rose to 33% of revenue from 30%, and gross margin fell to 71% from 78%.
- China commerce revenue +32% to $3.6B (a slowdown from FQ2's 47%); international commerce (AliExpress-driven) +39% to $284M; cloud computing/infrastructure +85% to $58M; everything else (boosted by acquisitions) +266% to $309M.
- Taobao GMV (driven by smaller merchants) +43% to $80B; Tmall GMV (driven by larger merchants) +60% to $47B. Annual active buyers rose to 334M from 307M in FQ2 and 231M a year ago.
- Yahoo (NASDAQ:YHOO) is following Alibaba lower, and is now down 9% since posting Q4 results and announcing its spinoff plans.
- Alibaba's FQ3 results, PR
- Related tickers: OTCPK:SFTBF, OTCPK:SFTBY
Thu, Jan. 29, 9:12 AM
Wed, Jan. 28, 12:40 PM
- After having surged above $51 in AH trading yesterday, Yahoo (YHOO +1.7%) is back below $49 today after beating Q4 estimates, providing light Q1 guidance, and unveiling plans for a tax-free spinoff of its Alibaba stake.
- Hurting Yahoo's cause: Alibaba (NYSE:BABA) is selling off in the wake of the spinoff news - by proxy, Yahoo's SpinCo increases the supply of Alibaba shares - and criticism from Chinese regulators about illicit goods sold on its sites.
- The spinoff has triggered speculation Alibaba could buy back the spinoff shares to lower its share count and/or simplify its share structure. However, as Bloomberg's Matt LeVine observes, to maintain the SpinCo's tax-free status, Yahoo can't have a pre-arranged agreement to sell it back to Alibaba, and the SpinCo will have to wait a year before selling itself. "Until then, SpinCo ought to trade at a discount to Alibaba, since it's just Alibaba plus a tax liability."
- SunTrust's Bob Peck has raised his Yahoo target by $4 to $61. He notes (Alibaba-funded) buybacks have lowered share count by 13% since Q1 2013, and likes CFO Ken Goldman's Yahoo Japan remarks.
- Evercore's Ken Sena estimates the spinoff yields $16/share in tax savings. He values the SpinCo at $48/share, assuming Alibaba trades at the midpoint of current levels and Evercore's $130 target.
- Alibaba reports tomorrow morning.
- Update: Yahoo closed down 3.2%. Alibaba closed down 4.4%.
Tue, Jan. 27, 7:00 PM
- Yahoo (NASDAQ:YHOO) has guided in its Q4 earnings slides (.pdf) for Q1 revenue (ex-TAC) of $1.02B-$1.06B, below a $1.1B consensus. Adjusted EBITDA is expected to fall to $200M-$240M from $306M a year earlier, and op. income to $50M-$90M from $149M.
- The company used its Alibaba IPO windfall to buy back $980M worth of shares in Q4 at an average price of $45.26 (contributed to the EPS beat). $9.7B have been bought back since Q2 2012.
- Q4 search revenue (ex-TAC) was nearly flat Y/Y at $462M, after rising 6% in Q3. However, search click revenue (excludes Microsoft payments) rose 18%, driven by a 10% increase in paid clicks and a 7% increase in price per click.
- Display revenue (ex-TAC), still hurt by share loss and the transition to native ads, fell 5% to $464M. Ads sold rose 17%, but price per ad fell 20%. All other revenue rose 2% to $253M.
- Americas revenue was flat Y/Y at $913M. EMEA fell 7% to $87M, and Asia-Pac 7% to $180M. Operating expenses rose 6% to $923M.
- On the CC, CFO Ken Goldman says Yahoo didn't include its Yahoo Japan (OTCPK:YAHOF) stake in the Alibaba spinoff in order to keep the transaction simple, but hints some other move could be on tap. "We are not saying we will not do something."
- Marissa Mayer says Yahoo is talking with Microsoft about the terms of the companies' search alliance; Mayer has made it clear more than once she's not happy with its performance. Not surprisingly, she also suggests Yahoo would love to displace Google (previous) as Apple's Safari search provider.
- YHOO +7.4% AH. Q4 results, Alibaba announcement.
Tue, Jan. 27, 5:35 PM
Tue, Jan. 27, 4:06 PM
Thu, Jan. 8, 11:39 AM
- Though Marissa Mayer (NASDAQ:YHOO) is reportedly uninterested in a deal and Tim Armstrong (NYSE:AOL) has dismissed the M&A speculation swirling around his company, activist Starboard Value is once more reiterating its call for a Yahoo/AOL merger.
- Starboard argues a merger would yield cost synergies of $1B-$1.5B/year, help Yahoo carry out "a tax-efficient separation" of its Alibaba/Yahoo Japan stakes, and create "a strong growth platform given AOL's progress in mobile and video advertising."
- The firm also says it's "increasingly concerned" about reports stating Yahoo is thinking of making a big media acquisition with its Alibaba IPO proceeds. In addition, it's not happy with speculation Yahoo is "considering a cash-rich split-off as a structure to separate its non-core minority equity interests," rather than "a spin-off structure or other available alternatives to unlock the full value of the stakes in Alibaba and Yahoo Japan."
- Yahoo has said it will offer more details about its plans to tax-efficiently monetize its remaining Alibaba stake during its Q4 earnings CC (set for Jan. 27).
- Both Yahoo and AOL are rallying. The Nasdaq is up 1.7%.
Tue, Jan. 6, 2:05 PM
- A fresh rumor that Carl Icahn is buying a stake in Twitter (NYSE:TWTR) has led shares to rally in spite of a broad market selloff. An Icahn/Twitter rumor also broke out in 2013.
- Yahoo-related speculation might also be helping Twitter's cause. Ex-Yahoo CEO Ross Levinsohn declared on CNBC Twitter should acquire Yahoo's (NASDAQ:YHOO) core business - most of the company's market cap is tied to its Alibaba/Yahoo Japan stakes - and SunTrust's Bob Peck offered ten reasons why he thinks a Yahoo/Twitter merger makes sense.
- Among Peck's arguments: Twitter could integrate its display and mobile ad platforms with Yahoo's; both companies claim strong news, sports, finance, and entertainment audiences; Twitter's short-form content could be matched with Tumblr's longer-form material; and Twitter's interest graph data could be paired with Yahoo's demographic data for ad targeting purposes.
- In terms of growth profiles and valuations, Twitter and core Yahoo are very different entities.
Dec. 12, 2014, 10:54 AM
- Hortonworks (NASDAQ:HDP) opened at $24 and is now at $24.13, up 50.8% from its $16 IPO price.
- Hortonworks, one of the two most prominent developers (along with Intel-backed Cloudera) of software distributions for the Hadoop big data framework, is now worth just over $1B, or ~15x gross billings from the 12 months ending Sep. 30.
- Yahoo's (YHOO +1.1%) 7.6M-share (16.8%) stake is worth $183M. Teradata's (TDC -1.4%) 2.9M-share (7%) stake is worth $70M.
- Prospectus, IPO analysis
- Prior Hortonworks coverage
Nov. 14, 2014, 3:12 PM
- Oppenheimer has hiked its Yahoo (YHOO +2.1%) target by $12 to $61, and FBR has hiked its target by $10 to $60. Shares have made new highs, and (with a big assist from Alibaba) are now up 27% YTD.
- FBR's William Bird: "YHOO offers a lower-cost play on Alibaba with the potential for improved core Yahoo performance as new initiatives (i.e., mobile, native, social, and video) likely start to overcome core display pressure."
- His new target (naturally) reflects Alibaba's post-IPO rally, partly offset by expectations of lower buybacks (due to a higher stock price) and a slight reduction to his sum-of-the-parts valuation due to the BrightRoll deal.
- Two days ago: Yahoo, Alibaba rally following (more) bullish notes
Nov. 12, 2014, 1:15 PM
- Much as they did a week ago, Yahoo (YHOO +2.8%) and Alibaba (BABA +3.7%) are rallying following upbeat Street commentary. BofA/Merrill and UBS have hiked their Yahoo targets in the wake of the BrightRoll deal, BMO and SunTrust have offered positive remarks about Alibaba's Singles Day performance, and HSBC has launched coverage on Alibaba at Overweight.
- BofA/Merrill's Justin Post argues BrightRoll "should enhance Yahoo’s video ad serving capabilities and put the company in a more competitive position with Facebook’s LiveRail, AOL’s Adap.tv and YouTube." His target has been hiked by $7 to $55.
- SunTrust's Robert Peck thinks Alibaba's Singles Day revenue may have risen 65% Y/Y. He also expects the company's mobile monetization rate (up strongly in FQ2, though still below PC levels) to rise again in FQ3, aided by "Tmall growth and strong ROIs for mobile ads on Taobao."
Nov. 5, 2014, 11:32 AM
- Plenty of firms (including many of the underwriters who just launched coverage) have hiked their Alibaba (BABA +3.5%) after the company beat FQ2 revenue estimates yesterday (while posting in-line EPS) on the back of strong GMV growth and improving mobile monetization. Both Alibaba and Yahoo (YHOO +2.3%) are making fresh highs.
- In addition to Alibaba's gains, Yahoo is benefiting from a bullish launch from SunTrust's Robert Peck. Peck considers the weakness in Yahoo's core properties priced in, and believes the Street is "giving little credit to some of the progress made more recently around mobile, native [ads], Tumblr, search, and video." He estimates the core business is being valued at less than 1x EV/EBITDA.
- Morgan Stanley likes Alibaba's 262% Y/Y mobile GMV growth, and thinks the acceleration seen in Taobao GMV points to improved conversion rates. Meanwhile, Jefferies and BofA/Merrill are pleased with management remarks suggesting an average customer's spending grows considerably over time.
- Cantor: "A differentiated pricing model, strong brand and unmatched scale continue to give Alibaba an unfair competitive advantage relative to peers both in and outside China. We believe the company's outsized growth and margin profiles should support higher valuation over time."
- The firm has hiked its FY15 revenue and EPS estimates, albeit while slashing its EBITDA estimate on expectations spending will remain elevated. Alibaba, for its part, doesn't plan to provide guidance.
Oct. 22, 2014, 11:36 AM
- "We have the best tax experts in the country working intensively on structures to maximize the value to our shareholders of our remaining stake in Alibaba," said Marissa Mayer during Yahoo's (NASDAQ:YHOO) Q3 CC. Her company is set to pay $3.3B in taxes on its sale of 140M Alibaba shares at IPO time.
- CFO Ken Goldman added Yahoo "negotiated hard" with Alibaba to "be able to take actions" during the 12-month lockup period for its remaining 384M-share Alibaba stake that would leave Yahoo "in position to create structures or approaches that would allow us to hopefully presumably take advantage of minimizing taxes."
- FBR has cited Yahoo's tax-saving efforts as a reason for upgrading shares to Outperform post-earnings; it sees up to $13/share in potential savings. The firm is also upbeat about Yahoo's mobile efforts.
- In the wake of TechCrunch's report about a potential BrightRoll acquisition, Marissa Mayer responded to a question about acquiring a programmatic ad company by suggesting Yahoo is open to buying a firm that's "either in the building block category or the strategic category," albeit while cautioning "more consideration" would be needed.
- As expected, the 24% Y/Y drop in Yahoo's display ad prices was attributed to low prices for native ads (often shown on mobile devices); Mayer said Yahoo is looking to boost prices by improving targeting. Regarding search ads, she noted paid click growth (flat Y/Y) was pressured by ad quality improvements in Asia-Pac; Americas paid clicks were up 9%.
- Prior Yahoo earnings coverage
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