With Alibaba IPO official, pressure mounts on Yahoo

Marissa Mayer
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The clock is ticking for Yahoo as Alibaba's initial public offering becomes a reality, analysts said.

"Effectively, management has been hiding behind the Alibaba IPO and investors have been giving them some wiggle room," said Youssef Squali, an analyst at Cantor Fitzgerald.

"2014 absolutely needs to be year for [Yahoo] to show growth, otherwise this thing is going to be a value trap for a while. This is a make or break year for Marissa Mayer, she's not going to get another honeymoon period with investors," said Squali.

(Read more: E-commerce giant Alibaba starts plan for US IPO)

"The reason for that is as long as the IPO carrot is dangling in front of investors they will stick around, because they know they will get a payday. But the day it goes public Yahoo's management will need to start delivering on the core of Yahoo and what that means," Squali said.

Since Marissa Mayer joined Yahoo as CEO in 2012, the company's stock has doubled. But the growth has been primarily driven by the company's 24 percent stake in the Alibaba, not by actual growth within Yahoo, said Trip Chowdhry, managing director at Global Equities Research.

(Read more: Alibaba's ditch - How bad is it for Hong Kong exchange?)

"We need to give credit where credit is due and that is Yahoo's stake in Alibaba. When Alibaba goes public the company will get some more money, but from the fundamental point of view investors should ask has Marissa Mayer really improved Yahoo? And I would say not at all."

How to play the Alibaba IPO
How to play the Alibaba IPO

Mayer has been making moves during her tenure to try and turn things around at the company, but so far hasn't really proved that the company's core business can generate revenue growth, analysts who spoke to said.

(Read more: Alibaba's growth slows for Yahoo, IPO buzz builds)

One big move Yahoo made last year was its acquisition of Tumblr for $1.1 billion. But, the company has yet to make money off that investment, said Squali, who has a "buy" rating on the stock with a $40 price target. With Alibaba's IPO expected this year, though, the pressure is on Mayer to turn a profit from Tumblr and other investments, he said.

Still, the Alibaba IPO will likely bring Yahoo's stock price up—at least temporarily.

Alibaba could raise as much as $15 billion to $16 billion when it goes public, valuing the company at more than $100 billion, according to analysts. Yahoo, which has a 24 percent stake in the company, is required to sell a little less than half of its stake at the offering, meaning there's going to be a lot of cash taken off the table.

But investors chasing the Alibaba IPO by investing in Yahoo's stock may want to take heed, analysts cautioned.

"If you are investing in Yahoo for the Alibaba payoff you may want to be careful. Investors should be asking, 'will I get to see this cash?' " said Colin Gillis, a senior technology analyst and director of research at BGC Financial.

There are three things the company may do when it takes that money off the table, Gillis, who has a "hold" rating on the stock and a $34 price target, said.

Yahoo will either do a one time dividend, increase its share buyback or will spend its cash on acquisitions. The last two options are more likely, Gillis said.

"The first step with this asset is to turn it into cash, and then the next bit is you gotta turn that cash into revenue growth," Gillis said.

How Yahoo plans to do that exactly, though, is still the big question, analysts said. The company declined to comment.

By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.