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Yandex IPO up 41% to $35 a share

The company initially priced shares at $25, but demand has driven share prices to $35

Financial trends and news by Faith Merino
May 24, 2011 | Comments
Short URL: http://vator.tv/n/1ac6

Yandex, also known as the Google of Russia, has debuted on the stock market as the NASDAQ-listed YNDX and has already soared over 41% to $35.31, after initially pricing its nearly 52.2 million shares at $25.

At $25 a share, Yandex stood to raise $1.3 billion, but now the company is expected to raise $1.8 billion, with a market cap of $11.2 billion. By comparison, in 2004, Google (the Google of America) raised $1.7 billion.

Yandex is the latest Internet company to join the bevy of IPOs in the past several weeks, the most recent (and notable) being LinkedIn, which exploded on the New York Stock Exchange last week at $83 a share, a full 84% higher than its initial price of $45. The company hit a mid-day high of $115 and closed its first day of trading at $94.25, more than double its original IPO price. On Friday it closed at $93, and today it’s down to a more modest $88, which is still a significant leap from $45.

Others haven't done as well, like the Chinese social network Renren, which started trading on Wednesday, May 4, at $19.50, and by the end of the day, it was down $18.01. Today, it's down to $12.73.

Two weeks ago, Yandex announced that it would be pricing its shares at $20 to $22, but obviously enthusiasm for the company’s IPO has been mounting. Founded in 1997, Yandex raked in $440 million in revenues in 2010 for a net income of $134.3 million. The company saw a healthy Q1 2011 income of $28.8 million, despite increasing competition from its primary competitor, Google. Google touched down in Russia in 2001, opening its first Russian office and launching its first Russian-language search engine. In 2006, Google developed and launched its Russian-language morphology-based search capabilities. But to date, Google accounts for less than a quarter (22%) of the Russian search market, compared to Yandex’s share of 65%.

Even more concerning is the fact that new competition may come from the Russian government itself, which declared in January 2011 that a “national” search engine is a top governmental priority. That might not be so bad in itself, but Yandex notes that such a project would likely benefit from governmental subsidies and other forms of preferential treatment not available in the private sector.

Nevertheless, Yandex is doing well for itself. In March 2011, the site drew 38.3 million unique visitors via PCs, mobile phones, tablets, and other devices.

 


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