Yahoo Closes Above $38 For The First Time Since Early 2006

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Yahoo shares closed above the $38 mark today, cresting that barrier for the first time since early 2006 on the strength of a nearly 4 percent gain on the day.

Yahoo has since endured a long winter of CEO changes and lackluster direction. But the company’s shares have rallied strongly under the leadership of CEO Marissa Mayer, who took on the role in July 2012. While Yahoo still suffers from declining revenue from both search and advertising, Mayer’s time atop the company has seen it execute well on a mobile-first strategy. Mayer has also brought back to Yahoo prestige that it long lacked, helping it better hire and retain employees.

Investors have cheered its rapid-fire pace of acquisitions, but it’s important to keep in mind that Yahoo is set to cash in mightily when Alibaba goes public. The company did recently announce that when Alibaba does in fact float, it will manage to hold onto more of its shares. As Alibaba’s value has increased, so too has the monetary value of Yahoo’s massive stake in the firm, and thus the value of Yahoo itself. The combination of Mayer’s popularity, Yahoo’s growing mobile userbase (now more than 350 million monthly actives), and the Alibaba story have pushed the company’s value north.

Here’s the chart:

2013-12-04_13h10_04

Yahoo has yet to solve the problem of its slipping revenue. Recent hires - including the vaunted Couric and Pogue – directly indicate that Yahoo expects a renewed focus on content will help it drive its top line. However, a rising tide of mobile usage has yet to translate into new revenue.

Yahoo hasn’t proven synergy between the two gambits. Yahoo has enjoyed a torrid rise, but if it wants to continue its ride, showing year-over-year revenue growth will be mandatory.