Yahoo Stock Falls Amidst Brewing Legal Battle

When the trading floors of the New York Stock Exchange opened on Friday, Alibaba (BABA) and Yahoo (YHOO) stocks were creating a bevy of activity as investors tried to get in on the action.

As reported by The Inquisitr, Alibaba (BABA) was offering Americans a share of their profits gained from their dominance in the Chinese e-commerce market with their IPO, but why was Yahoo (YHOO) stock caught up in the frenzy?

Jim Woods, Editor-at-Large at The Wealth Shield, explains how Yahoo stocks relate to Alibaba’s IPO.

“So, what does Alibaba mean to Yahoo stock? Well, a whole lot of money, given the 22% stake the diversified search giant owns in BABA. If Alibaba performs as expected on Friday, Yahoo will get a huge windfall for its 2014 bottom line.”

Leading up to the IPO, Yahoo stock had risen by 20 percent in the space of a month, according to Forbes. However, by the close of trading on Friday, some analysts were giving the company an all-time low valuation, putting it somewhere close to zero. The fall in the Yahoo stock has been due to selling pressure from Yahoo stock owners who dumped the stock to either buy Alibaba stock or cash in on the gains made on the stock.

As if this news wasn’t bad enough, Yahoo is now facing a civil lawsuit, which accuses the company and its law firm of fraud and conspiracy to overturn a $2.7 billion judgement passed by a Mexican court.

Earlier in 2011, two Mexican companies had taken Yahoo to court over an alleged breach of contract related to a yellow page listing service. The judge ruled in favor of the Mexican companies, and ordered Yahoo to pay $2.7 billion in damages.

Now the companies are taking them back to court with claims of corrupt dealings

Forbes contributor Dolia Estevez reported that Yahoo and their legal counsel, Baker & Mckenzie, enlisted the services of Edgard Elias Azar, Cheif Justice of Mexico City’s District Superior Court, to overturn the judgement and influence the appeals process in their favor.

In separate emails, a Yahoo spokesperson and Kevin P. Blasko, Senior Manager of Baker & McKenzie, said the lawsuit has no merit, and that they will vigorously defend themselves against these claims.

CEO Marissa Mayer will no doubt have a lot on her hands in combating the fall in Yahoo stock, not to mention fighting the allegations of corruption.

[Photo Credit: Stephen Lam / Reuters]