Yahoo CEO Marissa Mayer has been on the job for just about one year.
It’s been a great year.
As TIME business reporter Sam Gustin pointed out on Twitter earlier this morning, Yahoo’s stock has exploded during Mayer’s first twelve months.
Check out the stock chart:
But here’s the thing!
Over the next couple days, you are going to see a lot of people write about how this chart shows just how great of a job Mayer has done so far.
Don’t buy it.
Mayer actually is doing a pretty good job, according to current Yahoo employees, shareholders, and even some Yahoo executives that she’s pushed out of the company.
She’s done a good job improving the work ethic of the average Yahoo employee. She’s laid out a clear strategy (get a Yahoo app on every phone). And she’s made a big bet, buying Tumblr.
But Yahoo’s exploding stock price has very little – almost nothing! – to do with Mayer or her work during the last 12 months.
There are two reasons Yahoo’s stock is up so much over the past year…
- Reason #1: One is that Yahoo owns a large stake in a hot, pre-IPO, Chinese Internet company called Alibaba, and buying Yahoo stock is the only way for many investors to get exposure to Alibaba. Yahoo also owns a big percentage of Yahoo! Japan. If you subtract the value of these stakes from Yahoo’s market cap, the remaining amount of money – the value of the Yahoo core business Marissa Mayer manages – is close to zero.
- Reason #2: In the middle of last year, Alibaba paid Yahoo $7.6 billion to buy back a relatively small portion of that stake. Yahoo took that money and started buying Yahoo stock with it. This drove up the price. Another reason this deal drove up the price was that as a part of the deal, Yahoo will be able to sell another huge, ~$7 billion, chunk of Alibaba when it IPOs. Shareholders expect Yahoo to use that money to buy stock, too.
Marissa Mayer – who, again, has done a good job by all accounts – played almost zero role in creating Reason #1 or Reason #2 for Yahoo’s stock explosion.
In fact, the Yahoo CEO who deserves the most Yahoo’s exploding stock price is actually Jerry Yang.
Yahoo cofounder Jerry Yang was widely mocked when, a few years ago, he rejected Microsoft’s offer to buy Yahoo for $33 per share, a share price the company has not seen since.
Yang was mocked, and then booted from the company he founded. He eventually even left its board.
But Yahoo stock is above $27 today because back in Yahoo’s early days, Yang made a brilliant investment in Alibaba and Yahoo Japan.
(This is why we are bullish on Yang’s new job: startup investor. Clearly he has an eye for it.)
Mayer isn’t even the CEO who deserves the second most credit for Yahoo’s stock explosion.
That’d be Scott Thompson.
This may be a surprise because Thompson was only CEO of Yahoo for a few months during the first half of 2012.
Just months after taking the job, he was moved out of the company following a resume scandal, brought forth in a heated proxy fight with activist Yahoo shareholders (who won, and now sit on Yahoo’s board).
But during his short stay, Thompson was able to start and, essentially, complete the talks with Alibaba that led to the $7.6 billion cash infusion Yahoo is still using to buy back Yahoo shares, and drive up their price.
This wasn’t an easy task. Thompson’s predecessor, Yahoo CEO Carol Bartz, had deeply insulted Alibaba management only a year prior, by treating them as though they were her employees (and not the reason any investor anywhere still bothered with her company).
Thompson was the guy who went to Alibaba, ate crow, and got the deal going.
The person who executed the deal was Yahoo’s CFO at the time, Tim Morse.
Morse was actually an interim CEO at Yahoo for a time.
So, actually, there are three recent Yahoo CEOs who deserve more credit for Yahoo’s big share price move over the past year than Marissa Mayer.
AGAIN: This is not to say Mayer has not done a good job.
She’s done a good job!
Yahoo Mail is no longer shrinking.
The Yahoo homepage actually grew in the past year!
Employees and big shareholders are happy with her, and she’s clearly salvaged Yahoo’s brand some with industry people.
You just can’t give her credit for Yahoo’s share price.
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