Yahoo! Inc's Alibaba Connection

This e-commerce titan is pulling in five times what Amazon is making, and Yahoo's holding a big stake.

Mark Reeth
Mark Reeth and Simon Erickson
Apr 16, 2014 at 3:25PM
Technology and Telecom

Shares of Yahoo! (NASDAQ:YHOO) traded up as high as 7% today, after beating analysts' estimates for its first-quarter earnings. Core revenues were up to $1.09 billion, with adjusted earnings per-share coming in at $0.38, $0.01 above the $0.37 per share estimates. However, the earnings beat pales in comparison to the big story with Yahoo! right now -- its stake in the Chinese e-commerce mammoth, Alibaba.

Alibaba currently has a market share of about 80% of China's e-commerce, doing revenue at a level of roughly five times what Amazon.com (NASDAQ:AMZN) is pulling in at the moment. Back in 2005, Yahoo! bought a large stake in the company, and currently owns about 24% of Alibaba. Alibaba is set to IPO this coming summer, with Yahoo! expected to divest about 40% of its investment at that point. The sale of those assets should result in about $10 billion to $15 billion coming in the door for Yahoo!.

Should investors be looking to get in with Yahoo! now before this gargantuan cash payday? On today's Stock of the Day, Motley Fool analyst Simon Erickson says he's holding off. In the video, Simon discusses Yahoo!'s current place in the world, as it searches for a new identity and new relevancy. This enormous cash infusion could give the company the chance to do big things. He'd like to get a picture of what those things are, and if they're moving in the right direction before he invests.