NEW YORK (TheStreet) - Yahoo! (YHOO) shares have been on a roller coaster since Alibaba's (BABA) IPO on Friday as the catalyst pushing the search giant's stock higher has essentially been taken out of the picture and investors are now going elsewhere.
Yahoo! which owned a 22.6% stake in Alibaba pre-IPO, sold 140 million shares of its holdings in the offering, leaving it with a roughly 15% stake in the company. The cash significantly boosts Yahoo!'s balance sheet. At the end of the second quarter, Yahoo! held $4.3 billion in cash, compared to $5 billion at the end of 2013, a drawdown of $700 million.
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As of mid-day Tuesday, Yahoo! shares are down 7.5% since Thursday's close. (Alibaba priced its IPO at $68 a share on Thursday evening.) The stock is trading up 0.23% to $38.74 at last check.
That said, several analysts have upped their price targets on Yahoo!'s stock over the past few days. Here's what analysts had to say:
Brian Wieser, Pivotal Research Group (Hold; $41 PT)
We are updating our Yahoo price target to $41 on a YE2014 basis to reflect the impact of the Alibaba IPO last week. While we are not incorporating specific assumptions around how Yahoo will deploy the surplus cash it retains (we estimate the company will hold $6bn on its balance sheet by YE2014), advertising-related acquisitions seem - or should be - all but inevitable given the company's current traction within the advertising community. In our view the best option for Yahoo would be to focus on ad tech companies with strong - and retainable - management teams.
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