I don’t know what is more surprising, the fact that Geocities was still around after all these years, or how much Yahoo paid for the site 10 years ago. I remember back in the late 1990s when personal web pages were popular, and one of the best free services around could be on found on Geocities. Others, included Tripod, Hypermart and even AOL (with its Hometown AOL). In the last 10 years, these sites have been eclipsed by an evolution of social networking sites, including Myspace and Facebook.
Indeed 1999, marked a relatively fun time in the stock market, with the internet bubble in full swing. Internet stocks fluctuated greatly on a daily basis, which made for profiable times for day traders. On Jan 28, 1999, when the deal between Yahoo (NASDAQ: YHOO) and Geocities was announced, Yahoo traded at $367.75, while shares of GeoCities sold at $117. Based on stock prices, the deal between the two companies was valued at $3.6 billion.
Flash forward to today, and Yahoo is stock is now languishing. On a direct comparison, Yahoo shares have traded as low as $8.94 this year. If you account for the three 2 for 1 stock splits since January of 1999 Yahoo shares were as low as about $72 in Jan 1999 terms. At today’s current price of $14, the same shares are equivalent to $112, representing a still significant 10 year loss for long term shareholders.
But it’s just as well that Yahoo closed Geocities. Personal home pages have been eclipsed by the social networking sites, and blog sites, including WordPress and Blogspot. But it represents the end of an earlier era on the internet. Speaking of Yahoo, at these levels, short term gains may be hard to come buy, but the stock likely represents a decent long term stock buy. A good entry point for the stock would be less than $13.