Gabelli Discusses Alipay Events From Yesterday (YHOO)

Gabelli & Co. is out with a research note on Yahoo YHOO, as it discusses the events surrounding Alipay from yesterday. In a note to clients, Gabelli writes, "In the Q1 YHOO 10-Q, Yahoo disclosed Alibaba Group transferred Alipay to an entity in which Jack Ma, the chairman of Alibaba Group, has majority ownership. The stated purpose of the restructuring is to create a company with Chinese majority ownership capable of receiving a banking/online payment license. While we believe Alibaba Group, and by extension YHOO, will retain some of Alipay, ownership in a potentially valuable asset with significant option value is being diluted. Potential positives would be that the restructuring forces a separation of Jack Ma from Alibaba Group or allows Taobao to go public more quickly We calculate $23 PMV in 2012 assuming all of Alipay is moved out of Alibaba group. In the unlikely event Alibaba Group is worth nothing to Yahoo, we believe YHOO to be worth $17.80 per share. We see significant upside to our Taobao valuation and the spin of Y!J remains a potential catalyst." Shares of YHOO closed at $17.20 yesterday.