Yahoo! Inc (NASDAQ:YHOO) Inc. Looking To Compete Against YouTube With BrightRoll Acquisition
Yahoo! Inc. acquisition spree which has been under immense scrutiny from activist investor Starboard Value, is set to continue. After reports emerged the company is planning to acquire BrightRoll. The acquisition of BrightRoll highlights Yahoo’s shift of focus on video and video advertising content. BrightRoll is believed to have generated $100 million in revenue last year.
Imminent Competition against YouTube
Yahoo!'s fiercest rival in video advertising Google Inc (NASDAQ:GOOGL) has grown immensely mostly because of advertising carried out on YouTube, a platform that Yahoo would also wish to tap-into. TechCrunch reports that Yahoo! is serious on its push. If the deal goes through then it can be bought anywhere between $500 million to $1 billion as the company looks to up its game in video advertising
The acquisition of the startup will come in the wake of increased pressure from Starboard Value, which wants the company to either merge with AOL, Inc. (NYSE:AOL) or a selloff. The investor has also been pushing for a breakup of the company entities as one of the ways of ensuring focus is given on profit-generating entities. AOL CEO, Tim Armstrong, has already rubbished suggestion for a merger re-iterating that Yahoo does not feature in any of the company’s plans.
Change of Acquisition Strategy
BrightRoll is expected to give Yahoo! an advantage that should allow it to compete one on one against Google’s YouTube. The video platform has grown over the years in terms of revenue streams as it continues to attract publishers and advertisers. BrightRoll currently works as an intermediary and service provider for both publishers and advertisers, mostly working on mobile and connected TV devices
BrightRoll platform is ranked as one of the biggest of its kind in terms of ads served as well as its reach for unique video viewers. Yahoo! has already completed more than 30 acquires under the tenure of CEO, Marissa Mayer, some of which have not lived up to expectations in terms of returns. The Wall Street Journal expects the search engine company to make the switch on its acquisition plan especially after receiving the Alibaba cash
Yahoo! is expected to focus on acquisitions that build on its already existing products while also providing another unique revenue generating avenue.
Technicals
Yahoo! after finding support at $36 has started to move up again. The stock closed tad below its 20-Day EMA of $39.54. The volume in the stock is subdued, but having said that news of acquisition can push the stock up to levels of $40, $42 in short-term.
Actionable Insight:
Buy Yahoo! above $39.5 for target of $40.2, $42 with stoploss below $39
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