AOL Finally Puts Rumors of Yahoo Interest to Rest

While the AOL-Yahoo merger had been doing the rounds a few months back, CEO Tim Armstrong finally set the line straight by categorically stating that AOL (NYSE:AOL) was not interested in any of Yahoo’s (NASDAQ:YHOO) assets. ^[1] While AOL is dealing with some prominent executives departing the company, ^[2] the company has shown steady focus to develop its display ad business further, while its subscription business continues to decline.

See our complete analysis for AOL’s stock here

Departure of Executives Can Hamper AOL’s Comeback

After a growth in advertising revenues for Q2 and Q3, AOL has shown signs of comeback, holding somewhat true to its conviction of becoming a preferred display ad platform. However, the departure of prominent executives like Brad Garlinghouse and TechCrunch’s Sarah Lacy could clearly lead to a reduction in AOL’s talent pool which could lead this turnaround for the company. ^[3] Additionally, the news itself may send out negative signals on how AOL’s business is faring, both externally to investors and internally to the company’s employees.

We have a revised price estimate of $14 for AOL stock, which is roughly 4% above the current market price.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Reuters: AOL not chasing Yahoo, will stay independent: CEO [↩]
2. Bloomberg Businessweek: AOL’s Brad Garlinghouse Said to be Stepping Down From Struggling Company [↩]
3. TechCrunch: The Rumors are True, I Am Leaving TechCrunch [↩]