A 5% plunge in Yahoo (NasdaqGS: YHOO) shares on Friday hurt Internet exchange traded funds that count the stock as a top holding while investors continued to worry about the restructuring of a Chinese company in which Yahoo has a stake.
Earlier this week, Yahoo in a filing said the ownership of Alibaba Group’s online payment business, Alipay, was restructured. Yahoo has an ownership stake in Alibaba.
Yahoo is a large component in Internet HOLDRS (AMEX: HHH) and First Trust Dow Jones Internet (NYSEArca: FDN). Both ETFs were lower Friday.
Jefferies analysts in a note Friday said Alibaba has literally pulled the carpet out from under Yahoo. “The acute lack of clarity around the Alipay issue is calling into question the value and monetization potential of Yahoo’s Chinese assets in general,” they said in a note.
The Alipay development “raises serious concerns about Yahoo’s ability to retain this asset or monetize it fairly without potentially a long drawn out process that could include litigation,” Jefferies added.