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Quote of the Day
“The great stock market bull seeks to condense the future into a few days, to discount the long march of history, and capture the present value of all of the future.”
– James Buchan. Source: Devil Take the Hindmost: A History of Financial Speculation
April 12th – This Day in Stock Market History
April 12th, 1996 – Yahoo! goes public with (at the time) the 3rd highest first day gain of any stock, 154%. Yahoo! IPO price was at $13 per share, but due to strong demand trading started at $24.50. Yahoo sold 2.6 million shares to the public, and the stock had volume of over 17 million on its first day of trading, implying that the average share was traded more than 6 times on this day alone.
Yahoo stock closed the day at $33, after going as high as $43. The company would end the day with a market cap of $848 million, 120 times the company’s revenue (a Price to Sales ratio of 120). Yahoo lost $600,000 the year prior to its IPO.
Yahoo was one of the few survivors from the dot-com bubble that ensued, but the share price of the company has yet to return to its previous highs reached during the bubble.
Yahoo previously traded under the ticker symbol YHOO, but has spun off or sold all of its assets except for its large stake in Alibaba (Ticker: BABA)
What is left of Yahoo now trades as ‘Altbaba’, under the ticker symbol: AABA
Best April 12th in Dow Jones Industrial Average History
1984 – Up 2.31%, 26.17 points
Worst April 12th in Dow Jones Industrial Average History
1926 – Down 2.43%, 3.4 points
Read of the Day
Even today Yahoo trades at about half of its peak 2000 valuation. On January 2nd, 2000 Yahoo reached $500.13 per share ($125.03 in today’s price adjusted for splits) and was worth about $110 billion!
Yahoo made some very poor acquisitions and capital allocation decisions over its lifetime that destroyed shareholder value. For a look at a few: