Forget Tumblr And Hulu, It's News Out Of China That Has Yahoo Soaring

Tumblr CEO David Karp

When Marissa Mayer took over as Yahoo CEO, the stock was ~$16/share.

Today it’s ~$26/share.

Why is that?

Is it because Yahoo just bought Tumblr for $1.1 billion?


It is because Yahoo might buy Hulu for $800 million?


Is it because Mayer has operated Yahoo well, and investors are optimistic about the company’s future?

Maybe. But not really.

The truth is, Yahoo’s stock is exploding because Yahoo owns a very large stake in a pre-IPO Chinese e-commerce company called Alibaba, and that makes Yahoo is the easiest way for investors to bet on Alibaba.

That’s good news for Yahoo, because Alibaba is doing extremely well.

In terms of its ambitions, it’s more like a Chinese Google or a Chinese Amazon than a Chinese Yahoo.

Today, for example, there’s news that Alibaba launched China Smart Logistics Network, a service that delivers goods anywhere in China in 24-hours or less.

A year ago, it’s valuation was $40 billion. Today it’s closer to $60 billion. Some say it’s worth more.

This is all good for Marissa Mayer.

She can spend the next few years (and lots of Yahoo’s cash) trying to fix the company’s core business outside the scope of short term investors.

She doesn’t have to worry about managing the company quarter to quarter. She can make big bets on things like Tumblr and Hulu, and they don’t have to pay off right away.

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