Yahoo Shares Soar 23 Percent
NEW YORK (AP) _ The decision to include shares of Yahoo! Inc. in the S&P 500 index has been a windfall for shareholders, as index funds have fought to pick up shares of the Internet company.
Since financial services provider Standard & Poor’s announced on Nov. 30 that Yahoo would join the index, shares have risen nearly 66 percent. Shares of the Web powerhouse jumped $67.18 3/4, or 23 percent, to $348 in trading on the Nasdaq Stock Market on Tuesday.
The S&P 500 is an index that contains 500 of the most widely held stocks. Yahoo joined it at the close of trading Tuesday.
Index funds that track the performance of the S&P 500 are increasingly popular among investors who want to share the benefits of the blossoming stock market but want to minimize the risk in holding a small number of stocks.
However, to mimic the S&P 500, indexes needed to obtain shares of Yahoo! by the end of trading Tuesday _ and those have been hard to come by.
Yahoo only has 260 million shares, and only about two-thirds of those shares are actively traded, analysts estimate.
As a result of the thin liquidity, the stock soared Tuesday. More than half of the day’s rise occurred in the last 45 minutes of trading.
Overall, more than 50 million shares changed hands Tuesday, compared with average daily volume of 6.2 million.
Yahoo, based in Santa Clara, Calif., is one of the most popular starting points for Internet users. Yahoo, which attracts 33 million visitors monthly, offers a large directory of Web sites as well as free e-mail, chat and calendar services.
Perhaps more importantly for investors, Yahoo is one of the few Internet companies that makes a profit. For the three months ended Sept. 30, Yahoo reported operating income of $40.41 million on sales of $155.1 million.
Yahoo is replacing bus and ambulance operator Laidlaw Inc. in the S&P 500.