Happy Anniversary Marissa! Yahoo Stock Hits 5-Year High

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By Seth Fiegerman2013-07-17 17:21:54 UTC

Marissa Mayer's second year as Yahoo CEO got off to a good start with the company's stock hitting a five-year high.

Yahoo topped $29 a share in early trading Wednesday, an increase of more than 8.5% on the day, following the company's earnings report on Tuesday. The stock has now nearly doubled from its closing price of $15.65 a share on July 16, 2012, just before Yahoo named Mayer as its new CEO.

Wednesday's stock increase — like much of the stock's gains over the past year — have less to do with Mayer's success in turning around Yahoo's business than the success of the Chinese ecommerce company Alibaba.

Yahoo revealed in its earnings report that Alibaba's revenue hit $1.38 billion in the first quarter, an incredible 71% increase from the same quarter a year earlier, and profits increased at an even greater rate. Alibaba is expected to go public in the near future and investors are betting that Yahoo, which has a 24% stake in the company, will benefit heavily.

Alibaba

By comparison, Yahoo's own earnings report were generally disappointing. While the company beat Wall Street's earnings expectations, it fell short on revenue, reporting sales of $1.07 billion for the second quarter, down 7% year-over-year. Much of that comes down to Yahoo's display advertising revenue, which continues to decline year-over-year.

As Brian Wieser, a senior analyst at Pivotal Research Group, told Mashable in an earlier interview, "Much of what Yahoo the company has done doesn't really matter in the context of Yahoo the stock. Almost all the value that's been generated is because of expectations around Alibaba."

Even so, Yahoo stock is now on the verge of topping $30 a share, and perhaps more significantly, $33, which was the final price that Microsoft had offered to acquire Yahoo for back in 2008. Yahoo and its then CEO Jerry Yang were heavily criticized for turning down the offer.