$YHOO – Time To Short Yahoo With Both Hands

OMFG !!! WTF was Marissa Mayer and the Yahoo Board thinking when they approved the Tumblr acquisition. It is quite possibly the shittiest acquisition in the history of M&A, since the AOL-Time Warner farce. Unlike Facebook’s Instagram acquisition,  Yahoo has literally no use of Tumblr whatsoever. Instagram was a smart move by Zuckerberg, and the fact that Facebook was able to successfully integrate Instagram in its social media platform is commendable.  How The Fu*k is Yahoo going to Integrate/Monetize Tumblr is beyond me.

Yahoo’s (YHOO) parabolic rise and the Marissa Mayer buying/short-squeeze hysteria could possibly have come to an end with the Tumblr acquisition. The following weekly chart is my prediction of how Yahoo’s (YHOO) stock might trade over the next couple of months:

YHOO - Weekly Chart
YHOO – Weekly Chart

My price target on YHOO is $18. That is a approximately $8.70 move to the DOWNSIDE, given YHOO’s current price of $26.70. Not bad if you ask me. A stop-loss at $29 should give you a reasonable risk-reward. If you want to leverage this move, I recommend buying  YHOO Jan ’14 $28 Puts, which are currently selling for $3.30.

Note: Dan Loeb has been steadily reducing his position in YHOO. If Loeb’s next 13F shows a dramatic reduction in his YHOO position, shit could hit the fan faster than you can imagine, and the shorts will start piling on YHOO resulting in an accelerated price decline.

Recommendation: SELL

Price Target: $18

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