Yahoo rises ahead of Q2 earnings, Alibaba info

Yahoo investors have been looking pretty optimistic ahead of the company’s Q2 earnings report, due to be released later tonight after the closing bell on Wall Street.

A welcome message in the sales office at Yahoo Inc
Source: Bloomberg

The stock has been enjoying four straight days of gains, up 3.39% to $35.75, edging towards last month’s high of $36.16.

This was partly fuelled by Alibaba’s update last week to its IPO filing back in May. This suggests it now values itself higher at $130 billion, up from $117 billion.

The raised estimate was based on a higher share price granting stock compensation to employees, now at $56 per share, up from $50 in the previous filing.

However, many analysts are valuing the company much more, so we could still see Alibaba’s stock price debut at a higher level.

Yahoo’s share price could get a further lift on the back of any positive information related to the Chinese Internet giant later tonight, which could make it attractive to sell on the rally.

Yahoo owns a 24% stake in Alibaba and investors are now waiting for clues from Yahoo’s CEO, Marissa Mayer, on how she plans to use the cash haul. A lack of details on future plans could leave some investors disappointed and put a lid on any further gains.

There is also a bias to the downside that could hold Yahoo back from breaking above its 200 daily moving average (DMA). The stock is also currently trading under a Death Cross formed in May, when its 50 DMA crossed below its 200 DMA. 

The market consensus on its 12-month target price is at $40.92.

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