Yahoo has been on the hot seat more than any other major tech company over the last couple years. Between a sinking stock price, its stake in Chinese giant Alibaba, and a management team that has struggled to provide results, Yahoo has really not been a great company for investors lately. Short selling and put binary options have been the dominant way to make money off of this company as of late, but some experts believe that this could change. Jeffrey Smith, the CEO of Starboard Value, has commented that Yahoo has a lot of interesting things ahead of it, and could be a great buy as there is a lot of opportunity here.
Yahoo was planning on de-escalating its stake in Chinese e-commerce company Alibaba once the Chinese economy came crashing down a few months ago. Recently, they have changed their minds on this decision, and that has hurt their stock price over the immediate short term. Also keep in mind as you start thinking about Yahoo that even though they will not be selling off their stake in Alibaba at this time, they have begun plans to sell their web based business. This approach leaves a lot of questions about Yahoo simply because this was their main business model for so long. Much like Google was once just a search engine, Yahoo began as a search engine and news source. For them to leave this business model behind is very reminiscent of Google’s transition to Alphabet. But while Google has so far been successful with their transition, they also kept their search engine and web business fully intact. They were the world’s most widely used search engine before this, though, and that gave them a bigger interest in maintaining that position. Yahoo ranks at number two or number three in the world depending on the day, right with Microsoft’s Bing, but unlike these other two companies, Yahoo doesn’t have the same broad reach of products outside of its web business. There are plenty of reasons to be scared about Yahoo’s future, but if they can keep their biggest investors happy, then they must be doing something right. It’s just hard to know what that is right now.
If you’re a short term trader, there is absolutely no reason to change your strategy with Yahoo just yet. Keep in mind that Starboard Value is a huge stakeholder in Yahoo, and it would be in their best interest to see Yahoo’s price go up so that they could offload positions and cut some of their losses. While it’s true that the investment firm has been very critical of Yahoo’s CEO—Marissa Mayer—they nonetheless seem optimistic about what the company is capable of. Their point of view may be biased, so keep this in mind before you start focusing on Yahoo.
For traders, the logical next step with Yahoo is to observe. They are in a point of transition right now, and management changes seem likely. Starboard has been asked to submit a list of candidates to fill in on certain roles, even. It’s really hard to tell what’s going to happen with the company, and for that reason, long positions are a very bad idea right now. The trend is still downward here, and binary options traders and day traders alike need to know this before they start forming positions in the company. Going against trends can be dangerous, even for 60 second trades, and Yahoo, despite the optimism that some people have, the general trading public doesn’t really have any reason yet to adopt this attitude, especially if they have no incentive or existing stake in the company.