Yandex, ‘Russia’s Google,’ soars after Nasdaq IPO
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Another new Internet stock offering got a rousing reception from investors Tuesday.
Search engine firm Yandex, dubbed Russia’s Google, went public on the Nasdaq market at $25 a share and rocketed to close at $38.84, for a 55% first-day gain.
The deal came less than a week after Silicon Valley social networking firm LinkedIn soared 109% in its IPO debut, reviving memories of the dot-com mania of the late 1990s.
Yandex sold 15.4 million shares in its IPO while some of its private shareholders sold 36.8 million. The total of 52.2 million shares raised $1.3 billion in all, making the deal the biggest tech IPO in 2011.
With a total of 321 million shares outstanding, the Moscow-based firm now has a market value of $12.5 billion -- about 7.5% of Google’s market value of $166.9 billion, and about 60% of Yahoo Inc.’s value of $21 billion.
Yandex’s revenue of $440 million last year was a sliver of Google’s revenue of $29.3 billion.
In the prospectus for the IPO, Yandex calls itself the “leading Internet company in Russia.” The firm said it had 64% of all search traffic in Russia in 2010, to Google’s 22%.
The company, founded in 1997, last year earned $134 million, or 44 cents a share. That gives the stock a price-to-earnings ratio of 88, compared with Google’s P/E of about 20 based on 2010 earnings.
Russia’s economy has great growth potential, and that obviously is drawing investors to Yandex. But besides the normal risks faced by any young company, Yandex’s prospectus lists a host of risks specific to doing business in Russia. For example:
Well-funded, well-connected financial groups and so-called “oligarchs” have, from time to time, sought to obtain operational control and/or controlling or minority interests in attractive businesses in Russia by means that have been perceived as relying on economic or political influence or government connections. We may be subject to such efforts in the future and, depending on the political influence of the parties involved, our ability to thwart such efforts may be limited.
Still, in an interview with Reuters, Yandex CEO Arkady Volozh, 47, said that ‘Russia deserves to have a technology company of a global level,’ and that Yandex wanted to fill that role.
‘Google is a great company but we are better,’ the company’s chief technology officer, Ilya Segalovich, 46, said in the same interview, apparently half joking.
Or maybe not.
-- Tom Petruno
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