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Yahoo eyes retail stock trading in major growth push

user avatar Author: Editors Desk Source: Axios
February 10, 2023 at 06:05
Photo illustration by Jakub Porzycki/NurPhoto via Getty Images
Photo illustration by Jakub Porzycki/NurPhoto via Getty Images

The company’s advertising group will be reduced by half by the end of the year

Yahoo's latest deal underscores its move to boost revenues and use its cash to grow its core businesses, including Yahoo Sports, Yahoo Finance and Yahoo Mail.

Why it matters: Acquired last year by Apollo Global Management, Yahoo plans to add on new commerce and transaction businesses, such as sports betting and, according to a company source, retail stock trading.

Of note: Yahoo generates around $8 billion in GAAP revenues annually, said the source. The company reported $7.1 billion in full year revenues in 2020, the last year it was owned by Verizon.

  • The source spoke anonymously because the company is private and the current GAAP revenue figure has not been previously disclosed.

Background: Now that the company has sold off its noncore assets, it's focused on core areas such as sports, finance and mail.

  • Those units could eventually be spun out either through a private sale or an IPO, Yahoo CEO Jim Lanzone told Axios.

Details: The company is eyeing the following strategic moves, Axios has learned:

  • Publishing: As of now, Yahoo has no plans to sell its smaller web publishing sites, like TechCrunch, Engadget and Autoblog, and it could look to add more publishing assets that are complementary to some of those sites.
  • Yahoo Finance: Executives are planning to build a retail trading platform within Yahoo Finance that would allow retail traders to leverage Yahoo Finance's data as part of a full suite of end-to-end trading tools, including buying and selling stocks. Internally, the idea is being referred to as creating a "Bloomberg for retail trading."
  • Yahoo Mail: Yahoo is also mulling over turning Yahoo Mail into a more commerce-driven coupon hub that capitalizes on the fact that many of its users already use Yahoo Mail as a second inbox for marketing emails.
  • Yahoo Sports: Yahoo plans to strike deals with sports betting companies to bring those opportunities to Yahoo Sports. It held talks with PointsBet but walked away from the deal because the Australian sportsbook was losing too much money, the source said. CNBC first reported on the talks in March.

Catch up quick: Apollo acquired Yahoo and AOL for $5 billion from Verizon in 2021, and it secured roughly $2 billion in debt to finance the deal.

  • In July 2021, Apollo sold Yahoo Japan's license to SoftBank for $1.6 billion. It sold Yahoo's content delivery network EdgeCast in May for roughly $300 million.
  • Those deals allowed the company to quickly return that equity to start reinvesting its profits to finance growth opportunities for its core brands.
  • On Monday, Yahoo announced a deal with Taboola in a move meant to boost its ad-tech division, the company's least profitable unit.

Be smart: Yahoo is expected to continue to explore some forms of subscriptions where it makes sense, like premium offerings for Yahoo Finance or Yahoo Mail, the source said.

The bottom line: "We’re here to invest," Lanzone told Axios. "Investing means not only innovating internally but being open to all partnerships, all M&A possibilities."

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