* Shares fall 9.7 pct after Yahoo sells stake worth $147 mln
* Shares have almost quadrupled in value so far this year
* Potential Alibaba Group stake sale more challenging-Goldman (Adds quotes)
HONG KONG/SHANGHAI, Sept 15 (Reuters) - Shares in Alibaba.com fell as much as 9.7 percent on Tuesday after Yahoo! Inc sold its 1 percent direct holding in China's top e-commerce company, a week after Alibaba's chairman sold a stake in the Chinese company.
Yahoo still holds 40 percent of unlisted parent Alibaba Group, which controls about 74 percent of Alibaba.com, and said the investment was an important, long-term way to participate in the China market.
Yahoo said the sale was driven by a big rise in the stake's value, with Hong Kong-listed Alibaba's share price nearly quadrupling this year.
Analysts said Yahoo's stake sale did not suggest weakness in Alibaba's business.
"At Alibaba.com's Alifest last week, they (management) were quite bullish on the outlook as well so I think Alibaba.com growth will still be strong," said JP Morgan analyst Dick Wei.
Alibaba shares extended losses and were down 9.7 percent at HK$19.10 after falling about 9 percent shortly after the market opened on Tuesday afternoon, while the broader market had edged up 0.3 percent.
The market was closed in the morning because of a tropical storm warning.
Jack Ma, Alibaba's chairman and founder, sold 13 million shares, or less than 5 percent of his total direct and indirect holdings, in the company for $35 million last week.
The share sale by Ma, one of the best known figures in Chinese Internet circles, was his first of shares in the company he founded 10 years ago.
Goldman Sachs said that although Monday's deal might signal Yahoo CEO Carol Bartz's willingness to divest more of Yahoo's $13 billion stake in unconsolidated Asia holdings, it would view potentially selling its stakes in Yahoo Japan and Alibaba Group as more challenging because of their substantially larger size and greater tax implications.
"The Chinese government and Alibaba Group management could require pre-approving potential buyers of the Alibaba Group stake, limiting the potential investor base and thus the valuation," Goldman said in a note.
Yahoo sold all of its 57.5 million shares in Alibaba for HK$1.14 billion ($147 million), or at HK$19.80 each, representing a 6.4 percent discount to the stock's close on Monday, a source close to the deal said on Tuesday.
Yahoo is a cornerstone investor, and as a group owns 157.8 million shares or 3.13 percent of the company, according to JP Morgan.
Yahoo bought Alibaba shares at HK$13.50 and is expected to make a profit of about $50 million before tax, Goldman Sachs estimated. (Reporting by Alison Leung, Melanie Lee and Alison Liu; Editing by Anshuman Daga)