Yahoo a huge activist play, market pro says

Yahoo shares are down since Alibaba went public last Friday, and for one market pro the tech giant's stock is a bargain that should be bought.

"I don't understand why this company is trading at such a discount. I think this is a huge activist play," Andrew Keene, of options advisory web site Keene on the Market, said Tuesday in an interview with CNBC's "Closing Bell."

For Keene, it all comes down to math.

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Yahoo still owns 16 percent of the Chinese e-commerce company Alibaba, which exploded onto the market in the biggest IPO ever last week.

Yahoo! headquarters in Sunnyvale, Calif.
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Yahoo! headquarters in Sunnyvale, Calif.

With Alibaba being valued at about $216 billion, Yahoo's stake in the company is valued at $34 billion, Keene said. "Yahoo is valued at $39 just from the Alibaba cash that they're going to have and how much their stake is worth," he said, and that doesn't even take into account Yahoo Japan or its U.S. business.

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Keene expects Yahoo to hit $45 in the next couple of months.

While Max Wolff, chief economist at Manhattan Venture Partners, agrees that Yahoo is undervalued as a trade, he doesn't think it's a good long-term investment.

That's because Yahoo has watched its competitors feed off its traditional revenue stream in display advertising and make more in streaming video, he said.

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"This company spent three or four years watching other people monetize its content and its user base better than it does. And the problem is in Web 2.0 land, four years is an eternity," Wolff noted.

—CNBC's Kate Rogers contributed to this report.

Disclosure: Andrew Keene owns Yahoo and is long calls in November in Yahoo. Max Wolff does not own Yahoo.

Disclosure: CNBC has a content-sharing partnership with Yahoo's finance site.