Yahoo is making amends for years of blundering with one smart move: an early investment in Alibaba Group that has turned into a multibillion-dollar boon.
The latest windfall came with Alibaba's record-setting IPO completed late Thursday, in which the Chinese e-commerce giant raised $25 billion. Alibaba's shares began trading for the first time on Friday on the New York Stock Exchange.
Yahoo is in line to make $8.3 billion to $9.5 billion from the initial public offering, depending on whether investment bankers exercise their right within the next month to buy additional stock in the deal.
The payoff supplements the $7.6 billion jackpot that Yahoo collected two years ago after selling another chunk of its Alibaba holdings and reworked a licensing agreement with the company.
Even if Yahoo ends up selling its maximum allotment of 140 million shares in the IPO, the Sunnyvale, California, company will retain a roughly 16 percent stake in Alibaba Group Ltd. worth another $36 billion to $37 billion.