Yahoo Inc. (YHOO - Analyst Report) CEO, Marissa Mayer, recently sold 36,000 shares worth just under $1.3 million. The 10b5-1 trade was dated back on July 23rd and sold at an average price of $33.81. A 10b5-1 transaction allows an executive to sell shares at a regular interval regardless of price.
Ms. Mayer only sold about 13% of her stake in Yahoo indicating that she is not making any major trades that could impact the company. Yahoo is currently trading at $37.60 per share and has a positive return of 12.68% in the past month.
YHOO Shares Lately
Yahoo Inc. shares have been moving higher since they last issued their quarterly earnings data on Tuesday, July 15th. The company reported $0.37 earnings per share (EPS) for the quarter, just meeting the consensus estimate.
YHOOhad revenue of $1.04 billion for the quarter, compared to the consensus estimate of $1.09 billion. During the same quarter in the previous year, the company posted $0.35 in earnings per share. The company’s revenue for the quarter was down 2.9% on a year-over-year basis. Analysts expect that Yahoo! will post $1.06 EPS for the current fiscal year.
Since Mayer took over, the value of Yahoo's stake in Yahoo Japan has increased by 71%. When Alibaba IPOs this fall, Yahoo will see its cash reach $9 billion. Its remaining stake of 23% in Alibaba will be worth $21.8 billion, up from $6.5 billion when Mayer took over, and as a rational investor and CEO of the company, selling all of her shares now would seem to be out of the question.
I feel that CEOs should have a big chunk of their net worth tied up in the company’s fortunes anyway, to ensure that they feel as though their future wealth and reputation depends on the prosperity or downfall of the company.
With that being said, investors should not be worried about the share sell-off Ms. Mayer as it is an automated trade that occurs periodically. If it was an out of the ordinary type of trade, then investors should be worried and find information of why she sold, and if it was for a personal reason, or more company related.
On the other hand, in the past 60 days we have downgraded shares of Yahoo from a “neutral” rating to an “underperform” rating, and have an EPS estimate of $0.87 for the end of next year. In fact, we currently have Yahoo as a Zacks rank #5 (strong sell) due to recent downgrades in earnings estimate revisions.
Yahoo is a solid company and should see major capital gains in its’ 23 % equity interest in Alibaba, and it may be able to cash in once BABA goes public (see Should Investors Be Worried About the Alibaba IPO?). But the short-run, Yahoo does not look like they are living up to expectations, though over the long haul, thanks to their Alibaba cash infusion, this could be a tech company that investors should have in their portfolios, assuming they can deploy this capital in a profitable fashion.
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