Yahoo! Stock Forecast Based On Algorithms

Despite loosing digital ad share to other online giants such as Google (GOOG) (GOOGL) and Facebook (FB), Yahoo! (YHOO) reported impressive revenue and earnings per share in its fourth quarter. Investors however were not satisfied that Yahoo!’s digital ad share has contracted in recent years.

Likewise, Alibaba Group Holding Ltd., a company that Yahoo! has a 24% stake in, reported decelerating revenue growth. Alibaba is China’s equivalent to a combination Amazon.com (AMZN) and Ebay (EBAY). Interesting enough, Alibaba has a market cap of $150 billion, about four times the size Yahoo!.

Yahoo’s stake is estimated to be worth about $37 billion, a notable increase from the $1 billion Yahoo! invested in 2005 for a 40% stake. According to Bloomberg, Yahoo! is expected to sell of some of its stake when Alibaba goes public in the U.S. While this move would liquidate plenty of capital for Yahoo!, this is still a risky move.

Yahoo! CEO Marissa Mayer, who has overseen an almost 150% stock rally fueled by her company’s stake in Alibaba, could diminish investors confidence in Yahoo!’s future if the money is not carefully reinvested. Consider this, about $21 of Yahoo!’s $39 share price comes from Yahoo!’s stake in Alibaba.

This investment in Alibaba has masked Yahoo!’s weakness in online advertising. To increase competitiveness, Yahoo! might try to develop a mobile-oriented search engine to contend with Google News for ad revenue according to tech columnist Kara Swisher. The proposal is being done in part of a contemplation of how Yahoo! could end its long-term search and advertising partnership with Microsoft.

Last year on March 29th 2013, I Know First made a bullish projection on Yahoo! for the 1-year time horizon. In accordance with the algorithm, Yahoo! returned 52.57%.

This forecast is a Top 10 Aggressive Stock Forecast. The term “aggressive” refers to the additional level of risk allowed by the algorithm. Please note, for trading decisions use the most recent forecast. Get Today’s Yahoo Forecast Now

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