Cookies on the Business Insider India website

Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.

One Bone-Head Mistake From A Former Yahoo CEO Cost The Company $54 Billion

Jay YarowNov 11, 2014, 03:52 IST

Here's a painful reminder for Yahoo shareholders.

In 2012, then-CEO Scott Thompson agreed to sell 20% of its stake in Alibaba. At the time, Alibaba was a private company with a ~$30 billion valuation.

Today, Alibaba is a public company valued at ~$300 billion.

Yahoo shareholder Eric Jackson says that Thompson's decision to sell cost Yahoo $54 billion. To put that number in perspective, Yahoo's market valuation right now is $48 billion.

There is some additional context to consider here. Once Yahoo agreed to this deal, it set Alibaba's IPO in motion, which led to its $300 billion public market valuation.

Further, at the time Thompson was on the outs with investors, so he needed to do something to save the company. Investors were also getting antsy about Yahoo's stake in Alibaba. They wanted Yahoo to dump the shares pronto to get the cash.

At the time, selling Alibaba shares wasn't universally regarded as a massive error. Now, it should be.