Yahoo! Inc. (NASDAQ:YHOO) Smashed on Alibaba Group Holding Ltd (BABA) StormAuthor: Paul SheaLast Updated: March 12, 2020 Yahoo! Inc. shares were set to open strongly lower on Wednesday as the firm’s shares in Alibaba Group Holding Ltd , the asset that traders put most value on, continue to do poorly amid a storm in China. Alibaba released its earnings for the three months through June on Wednesday morning. The firm’s failure to meet Wall Street’s forecasts has numbed those with Yahoo shares.Before the market opened Alibaba Group Holding said it earned 59 cents per share on sales of $3.27B. Wall Street was, by consensus, looking for the firm to show earnings of 58 cents per share on sales of $3.39B.Yahoo! Inc. tumbles on Alibaba connectionShares in the Chinese e-commerce firm were selling for $72.86 in pre-market at time of writing. That’s a fall of close to 6 percent from Tuesday’s close. Yahoo! shares were down by more than 4 percent at time of writing.Yahoo! owns 384m shares in Alibaba Group Holding . That asset, which Yahoo! wants to spin out on its own, was worth $29.7B at Tuesday’s closing prices. Yahoo itself is worth just $34B, meaning that its shares in the Chinese firm make up the vast majority of its value on the market.There is a storm brewing in the Chinese stock market, and possibly the wider economy, and traders are worried that a dampened outlook in the country will hit Alibaba Group Holding’s value. Their fears appear to have been confirmed by this morning’s lower than forecast earnings numbers.Alibaba said on Wednesday that it would use part of its cash reserves to buy back $4B in outstanding shares.On July 17 Yahoo! said that it had filed plans to spin off its massive holding of Alibaba Group Holding into its own entity. The shares are set to be spun out from the tech firm later on this year, but it’s not clear if the tax implications of the deal will free the firm’s shareholders from taxes on the spin out.Yahoo makes a break for freedomYahoo! has seen its shares of Alibaba Group Holding Ltd plummet in value in recent months as the firm’s place in China seems more and more fragile. So far this year shares in Jack Ma’s firm have lost more than 25 percent of their value. Shares in Yahoo! have fared even worse, losing more than 28 percent of their value since January 1 2015.Back in May Evercore ISI downgraded Yahoo! shares because of the problems with the spinoff. The report said that the issues that Yahoo faced could “prolong the application process into next year and possibly beyond.”Where once Alibaba was a massive boon to those with shares in Yahoo, and was a recommended buy for those who wanted exposure to Jack Ma’s firm heading into its IPO, now the shares are dragging on the value of Yahoo. Those with shares in the firm can see that clearly on Wednesday morning.