As part of Verizon’s (VZ) just-completed $4.48 billion buyout of Yahoo! (YHOO), Yahoo’s embattled CEO Marissa Mayer is stepping down. Hired in July 2012 and praised for reenergizing a stale brand in her first couple of years, Mayer took a lot of flak towards the end of her tenure as Yahoo’s growth failed to accelerate. But if you go by YHOO stock, Mayer’s five-year term was a rousing success.
When Yahoo hired the former leader of Google (GOOG) product development on July 17, 2012 at age 37, Yahoo stock was trading just under 16 a share. On Monday, Yahoo’s final full day with Mayer at the helm (at least publicly), YHOO stock closed at 53, down from the 17-year high of 54 it touched just a week ago. That’s a 233% rise in a smidge under five years, compared to an 80% rise in the S&P 500 over that same period and a 113% improvement in the Nasdaq.
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Here is a list of other high-profile growth stocks whose performance trailed YHOO stock during Marissa Mayer’s reign:
Apple (AAPL): +75%
Microsoft (MSFT): +129%
Exxon Mobil (XOM): flat
Chipotle (CMG): +46%
Verizon (VZ): +29%
Notice that last one? Verizon’s stock has vastly underperformed the stock market in the last five years. Clearly, it targeted a Yahoo buyout in part because it thought Yahoo, despite its struggles for growth, would improve its brand and, as a byproduct, goose its stagnant share price. We’ll see if that’s the case. What’s inarguable is that Yahoo, for all its flaws, was a good investment under Marissa Mayer.
In the end, Mayer did awaken what had been a moribund company. For evidence, all you have to do is look at the performance in Yahoo stock in the five years prior to her arrival. During that time, YHOO tumbled from 23 to 15. YHOO stock had peaked just before the tech bubble burst around the turn of the century, and had stopped growing altogether in late 2005. Under Mayer, share price appreciation returned, as the 10-year chart below demonstrates.
So to think Yahoo is worth the investment now that Marissa Mayer is gone would be a mistake. True, the Verizon buyout, and the extra $4.5 billion cash in its pocket, should help. But any change in leadership is a venture into the unknown. And while the narrative was that Mayer failed to spark enough growth in her five years running Yahoo, the reality is that sales did improve slightly—from $4.98 billion the year before she arrived to $5.17 billion last year. Prior to her arrival, Yahoo’s sales had been in a downward spiral for three straight years.
Mayer helped stabilize a failing company. And for the most part, investors bought in to Yahoo’s redemption story. Will Wall Street be as enamored with this new version of YHOO stock?
Stay tuned.
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