Yahoo Seen as ‘Walking Dead’ After Alibaba IPO: Chart of the Day

Yahoo! Inc. has taken on “a Walking Dead discount” since Alibaba Group Holding Ltd. completed its initial public offering two weeks ago, according to Aswath Damodaran, a finance professor at New York University.

As the CHART OF THE DAY shows, Yahoo’s market value is lower than the combined value of its holdings in the Chinese e-commerce company and Yahoo Japan Corp. and its cash, including after-tax proceeds from selling shares in Alibaba’s IPO.

Yesterday’s gap was $9.23 billion, according to data compiled by Bloomberg. The shortfall reflects an estimate by Damodaran, the author of four books on company valuation, that Yahoo has $8.02 billion in cash.

The discount is a sign of “investor concerns, merited or not, that Yahoo’s management might do something senseless with the cash,” he wrote two days ago in a posting on his Musings on Markets blog.

Another consideration is the tax bill Yahoo would face in a sale of its 16 percent stake in Alibaba and 35 percent holding in Yahoo Japan, Damodaran wrote. He estimated the Sunnyvale, California-based company would be liable for $16.3 billion.

Damodaran, whose postings show he has owned Yahoo’s stock since at least May, calculated an “intrinsic value” of $46.44 a share for the company. His figure was 15 percent higher than the closing price yesterday.

The name he used for the stock’s discount comes from “The Walking Dead,” a series on the AMC cable channel that features a post-apocalyptic world. The program is based on a comic-book series of the same name.

To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net

To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net Michael P. Regan, Jeremy Herron