It is a surprise that Yahoo stock has got shot by 5% yesterday with an increase in its estimated earnings in the third quarter. Its a celebration day for Yahoo because the company was facing major loss in its stock and earning since last year. Analyst estimated that Yahoo stock would sell for $0.33 per share on revenue of $1.08 billion , but the company went beyond the expectation and sold the stock for $0.34 per share on revenue of $1.08 billion. The stock's increase appears to be driven more by an announcement in the report that Yahoo will be able to hold onto more shares of Alibaba, the Chinese eCommerce giant it has a significant stake in, after the company goes public in the coming months.
Still, there are several red flags in the earnings report. Yahoo's overall revenue declined by 1% year-over-year due to continued struggles to revive its ad business. The number of ads sold in the quarter increased by just 1% year-over-year while the price per ad decreased by 7%. Display ad revenue for the quarter was down 7%. Yahoo stock price topped $30 last month for the first time since early 2008 and has since gone as high as $35, well above the $33 per share that Microsoft offered to acquire it for in 2008. These ups and downs in Us stock market are very common and not only Yahoo , many online companies face these revenue tweaks, but a successful company is the one who maintains their stock price to same level each year with only minor ups and downs which are bearable.
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