Verizon (NYSE: VZ) is up 17% in 2016, and has climbed steadily over the past 5 years. Seeking to fuel further growth, Verizon is trying to expand its reach into other industries, including video and advertising. Last year Verizon purchased AOL for $4.4 Billion in an attempt to do just that. So far, this purchase has worked out in the company’s favor. Now, Verizon is currently bidding for Yahoo with a similar goal in mind.
Verizon is mainly interested in Yahoo’s assets. This includes a lot of video content, but Yahoo has also already developed proprietary advertising technology that may prove to be very beneficial in the long run. On the other hand , Yahoo has been struggling recently and is down 10% on the year, perhaps allowing Verizon to get a cheap, but very solid deal. So, would it make sense for Verizon to acquire Yahoo?
To find out, researchers at Unanimous AI assembled a group of 50 Americans and had them answer questions, together as a Swarm Intelligence. The objective of the effort was to gauge public sentiment about what could be a massive deal in the internet and communications space. Here is a replay of the swarm answering one of those questions:
So, why did UNU decide that “Verizon stock drops, but gains strategic value?” Perhaps it is because Yahoo has lost some of its luster in recent years, and the market is unlikely to be impressed with the acquisition, even if it is a sound strategy. With massive competitors such as Google and YouTube, Yahoo has failed to stay relevant in the public mind. This is certainly reflected in Verizon’s falling stock price.
With that mixed result in mind, our researchers rephrased the question to ask the Swarm whether or not Verizon should pursue this acquisition. As you can see from the replay below, the Swarm reinforced its opinion that the deal makes less sense for Verizon than some insiders have predicted.
UNU provided a clear response: “No, Yahoo adds too little strategic value.” The Swarm seems to feel that an acquisition of a struggling Yahoo wouldn’t generate enough of a strategic edge for Verizon. And, while the slight support for the “Yes, Yahoo fills a critical need” option indicates a belief that this purchase might benefit Verizon as analysts (and the previous replay) suggested, the Swarm quickly finds its way to “no.” Even though Verizon is looking for help to push onward into the video and advertisement industries, UNU believes Yahoo is not a good match for the need.
What do you think about Verizon and Yahoo? Got a question about the market?
Join the Finance and Investing Swarm and ask UNU anything! Go HERE.
