What if you bought Yahoo in 2000?
US Tech · Internet. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play0.5× · S&P 500 same money: $4,626
$1,000 in Yahoo at the start of 2000 would be worth about $481 today. A plain S&P 500 index fund over the same years would have made more — the boring option won.
What happened: Yahoo sold to Verizon in 2017.
The story
Yahoo began in 1994 as Jerry Yang and David Filo's list of favourite websites and became, for a few years, the front door of the internet. At the 2000 peak it was valued at more than a hundred billion dollars, then lost about 85 percent in the crash. Yahoo made its most famous decisions in the following years by declining things: it passed on chances to buy Google and Facebook in their infancy, and in 2008 rejected a takeover offer from Microsoft worth roughly 45 billion dollars.
Its best decision was almost an accident. In 2005 it paid about a billion dollars for a large stake in Alibaba, the Chinese e-commerce company, and when Alibaba listed in 2014 that stake was worth more than Yahoo's own operations. Under Marissa Mayer the core business kept shrinking, and huge data breaches disclosed in 2016 cut the price Verizon paid for it in 2017 to below five billion dollars. The leftover holding company, renamed Altaba, was essentially an Alibaba fund that was eventually liquidated.
The lesson: Sometimes a company's best asset is a passive investment; for years the market valued Yahoo's core business at roughly zero once its Alibaba stake was counted.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 2000 | $108 | $481 | $4,626 | 0.5× |
| 2003 | $16.00 | $3,250 | $7,727 | 3.2× |
| 2005 | $38.00 | $1,368 | $5,763 | 1.4× |
| 2007 | $26.00 | $2,000 | $4,789 | 2.0× |
| 2008 | $23.00 | $2,261 | $4,626 | 2.3× |
| 2010 | $17.00 | $3,059 | $6,071 | 3.1× |
| 2012 | $16.00 | $3,250 | $5,312 | 3.2× |
| 2015 | $50.00 | $1,040 | $3,301 | 1.0× |
| 2018 | $52.00 | $1,000 | $2,519 | 1.0× |
| 2020 | $52.00 | $1,000 | $2,092 | 1.0× |
green = beat the S&P 500 · red = lost money
Best entry point in our set: 2003, turning $1,000 into $3,250. The S&P 500 from that same year: $7,727.
On this day
- 1 February 2008: Microsoft bids $44.6 billion for Yahoo
- 12 April 1996: Yahoo goes public and more than doubles
- 25 July 2016: Verizon buys Yahoo's core for $4.8 billion
Now try it without hindsight. The wheel decides the year and the asset class, you pick the position, ten seconds a pick, and we simulate to today. Yahoo is one of 258 positions on the wheel — including the ones that went to zero.
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