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How Much Is Yahoo Worth Without Alibaba? Not Much

How Much Is Yahoo Worth Without Alibaba? Not Much
Photograph by Andrew Harrer/Bloomberg

Much has been made of Yahoo’s increasing sprawl, as it swallows startup after startup. Sure enough, in a Tuesday call with investors, Chief Executive Marissa Mayer said Yahoo had made eight new acquisitions in the last quarter alone. But what Yahoo’s latest financial numbers really highlighted was how much the company is running two completely separate businesses: It is simultaneously a consumer Internet company struggling to eke out a living from ad revenue and a large stockholder in Alibaba, the Chinese e-commerce darling that is twice as profitable as Facebook.

The latter part of the business is clearly pulling the former along. Here’s how to think about it: Yahoo has a stock market value of $34.1 billion, and owns a 24 percent stake in Alibaba. Estimates for the current value of Alibaba, which is planning an IPO, range between $75 billion and $125 billion. If it comes in at the low end of that range, Yahoo’s stake would be worth $18 billion, or just over half of Yahoo’s total market value. At the high end, Yahoo’s stake in Alibaba would be worth $30 billion—which would imply that the rest of Yahoo’s enterprise is worth as little as $4 billion, or 12 percent of its current value.