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When we took a look at Yahoo Inc. last fall, soon after the appointment of CEO Marissa Mayer, we suggested investors were giving the company's core portal business little to no value. Ms. Mayer merely had to demonstrate Yahoo wasn't "a big zero" to make the stock a worthy bet.

So far, so good: The shares are up more than 50 per cent over the last seven months, to roughly $26 (U.S.) apiece. And Ms. Mayer is taking big steps to move the needle, including the $1.1-billion purchase of blogging site Tumblr.

A similar analysis done today suggests Yahoo's core business is still getting little love. Value-oriented investors might see it as another buying opportunity. Yet a closer look suggests the case for Yahoo stock is built largely on the frothy valuations of Chinese Internet stocks.

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Consider the sum of Yahoo's parts: Even after its Tumblr deal, it will have more than $5-billion in cash and other investments. More importantly, it has stakes in two Asian businesses, Yahoo Japan and the Chinese search company Alibaba Group Holding Ltd.

What are they worth? Significantly more than when we last checked in, meaning much of the recent rise in Yahoo stock isn't related to its domestic prospects, but to its overseas properties.

Yahoo Japan, whose shares are publicly traded, has gained more than 30 per cent this year. Yahoo's 35-per-cent stake in the company is worth roughly $10-billion, or more than $9 per Yahoo share.

Alibaba, of which Yahoo owns 24 per cent, is the true wild card. It's not publicly traded, financial information is sketchy, and what Yahoo does release in its quarterly reports lags by three months.

But oh, what numbers they are. Alibaba's December-quarter sales of $1.8-billion represented year-over-year revenue growth of nearly 80 per cent.

Alibaba's established valuation – based on the price at which Alibaba bought back a portion of Yahoo's stake last September – was $40-billion. Now, however, analysts are increasing their estimates to $80-billion, or more.

The analyst team at Cantor Fitzgerald, looking at other Chinese Internet companies, plus fast-growing U.S. names, tags Alibaba at $86.6-billion in its "base case" scenario, but allows its "bull case" would put the number at more than $108-billion.

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What kind of multiples do those figures imply? Hold on to your hats: The base case is an enterprise value, or net debt plus market capitalization, of 40 times Alibaba's EBITDA, or earnings before interest, taxes, depreciation and amortization. The Cantor Fitzgerald bull case price is a 50 EV/EBITDA multiple.

Only one company of the 700-plus in the S&P 500 and TSX composite has a multiple as high as 40, showing just how extraordinary that valuation is. However, both LinkedIn Corp. and Yelp Inc. (neither of which is in the S&P 500) easily exceed that mark, demonstrating that investors seem willing to put sky-high valuations on promising online properties.

So, an Alibaba stake assumed to be worth $10-billion or so to Yahoo last fall could now be worth $20-billion or more.

Here is how the Cantor Fitzgerald team values Yahoo shares: Almost $17 per share from Yahoo Japan and Alibaba, assuming the holdings' value must be trimmed by 40 per cent for taxes; about $6 for the cash; and just over $6 for the core Yahoo operations.

Put it all, together and Cantor Fitzgerald has a "buy" rating and $30 price target on the stock.

But remember that much of that valuation is based on the Asian businesses – not Yahoo's core operations. Last fall, any number of these sum-of-the-parts exercises suggested Yahoo was trading at merely the sum of its cash and Asian assets, with no value assigned to the domestic business.

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Yahoo's top-line picture is actually worse than before, with display advertising revenue falling 11 per cent year-over-year in the first quarter.

Tumblr, which brings millions of mobile users but an unclear revenue picture, may or may not solve that. "Basic math is that there is and should be relatively little value ascribable to the underlying business," says analyst Brian Wieser of Pivotal Research Group. "It's in permanent, secular decline."

Mr. Wieser still has a "hold" rating and $26 target price; he thinks "Yahoo should be fine, as a stock, regardless of what happens to its core property" because of its Asian assets.

I'm not here to suggest that Yahoo has peaked. Investor enthusiasm over Alibaba, which may have an IPO in the next year or so, could very well drive the shares higher. And Ms. Mayer will likely be given time to show the Tumblr deal works. That suggests the next 12 months could be good for Yahoo shares.

But the company also plans to gradually divest its Alibaba stake. Once Yahoo stock is decoupled from the Chinese growth story, and its core business stands on its own, we may get an entirely different definition of "tumbler."

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