Yahoo shares have been on the decline for the past few months but a bounce might be in order as the pair is testing an area of interest visible on the daily time frame. Price could find support around $35-36/share, which lines up with a former resistance area.
Further declines could take Yahoo shares down to the next support at $32/share. However, stochastic is already indicating oversold conditions and has turned higher, suggesting that buying pressure is building up. Meanwhile, RSI is slowly starting to edge out of the oversold area as well.
The 100 SMA is still below the 200 SMA on the daily time frame, suggesting that the longer-term downtrend might stay intact. Any bounces could serve as a correction for the stock before the selloff resumes later on.
Yahoo Shares Forecast
Yahoo shares are trending lower mostly due to the company’s recent acquisition of Polyvore, which many investors are doubtful on how it could support revenues. According to the company’s press release, Polyvore will help them sell more native ads focused on fashion.
Keep in mind that previous acquisitions by the company have generally merited negative reviews, such as that of GeoCities and Flickr. According to Bloomberg sources, Yahoo’s Polyvore acquisition has a price tag of about $230 million.
“Yahoo and Polyvore will power native shopping ads that drive traffic and sales to retailers,” said the companies in a joint statement.
“Our core mission of empowering people to feel good about their style will remain the same, but with Yahoo’s help we’ll be able to make Polyvore even bigger and better for our user community,” added Polyvore CEO Jess Lee.
Should the company fail to provide any convincing blueprint on how they could boost earnings from this acquisition, Yahoo shares could be in for further losses. On the other hand, a good road map for online ads using Polyvore could mean gains for the stock.
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