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ALIBABA SLIDES AFTER YAHOO SELLS STAKE
Shares of Alibaba.com, the world's largest online platform for trade between companies, dropped almost 10 per cent yesterday after Yahoo sold its entire 1 per cent stake in the listed unit for about $150m.
Analysts took the move as an indication that Alibaba.com may be peaking after a sustained rally in its share price since January this year.
But the step again raised questions over Yahoo's long-term commitment as a key shareholder of Alibaba. The US internet company still owns 39 per cent of the unlisted parent of Alibaba.com.
Yahoo sold the stake to realise profits made since Alibaba's 2007 listing.
“Yahoo regularly evaluates its financial investments and the value of its 1 per cent direct IPO investment in Alibaba.com has increased substantially. This increase is why Yahoo sold this financial position,” the company said.
Its move came barely a week after Jack Ma, Alibaba's founder and chairman, sold what the company said was less than 5 per cent of his holdings in the listed unit for HK$270m ($34m).
This was “likely to remove any stigma associated with Yahoo selling shares in Alibaba.com”, said James Mitchell, an analyst at Goldman Sachs, in a research note.
“Alibaba.com shares have rallied sharply, up 300 per cent year to date and up 50 per cent since Yahoo's initial investment.”
Alibaba has had strong growth during the past year, benefiting from the financial crisis as small and medium-sized enterprises turned to the internet as a low-cost marketing channel.
But Yahoo has not profited from this growth. Although the company had hoped that its 2005 tie-up with Alibaba would help it get its feet on the ground in the world's largest internet market by users, the opposite has happened.
According to Analysys, the Beijing-based internet research house, Yahoo's China site is now marginalised with a market share of 6 per cent, compared with close to 30 per cent for Google and more than 60 per cent for Baidu, the local search giant.
