If you said, "10% Downside to Yahoo’s Stock if Ad Rate Declines Continue", you're right! Of course, the headline is designed to attract readers and, in our case, it worked -- we clicked on it.
Many investors try to quantify potential upside/downside under various scenarios -- which is smart -- but the specificity of "10% downside" under this "decline" scenario is what strikes us as silly since there are so many moving parts with Yahoo! (and most other companies). It's simply very hard to know exactly what might/will happen. However, in fairness to the source of the headline, clicking on the link takes us to a brief summary of the author's analysis, including an apparent sum-of-the-parts based target price of $20.58 for YHOO.
Our long thesis on Yahoo (YHOO), as shared previously, is based on common sense:
- Yahoo owns an Internet franchise/brand that is impossible to replicate and that should only become more valuable with time as prime online real estate appreciates in value.
Disclosure: long YHOO.
© 2010 Jeffrey Walkenhorst
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