Russia's leading search company — and the world's seventh-biggest search engine — has recently completed its initial public offering, opening at higher-than-expected US$ 25 per share and raising US$ 1.3 billion in the process.
The Yandex NASDAQ IPO will involve about 52.2 million Class A ordinary shares, 15.4 million of which are Yandex' own, and 36.8 million from its shareholders. At the opening price of US$ 25 per share — higher than the previous estimates of US$ 20 to 22 per share — this will raise the company US$ 1.3 billion, bringing market capitalization up to US$ 8 billion. Yandex stock starts trading at NASDAQ as YNDX starting today.
A New Bubble on the Horizon?
Technology companies seem to be going the public route of late, with one of the bigger-ticket openings having recently commenced. LinkedIn's IPO made waves, having doubled its price in the first few hours of trading. Skype was reportedly preparing for an IPO prior to Microsoft's sudden announcement of an acquisition. Service and application providers are being acquired left and right.
The worry here, of course, is whether we're seeing the late early 2000's all over again. The Economist cautions that overpricing and instability — starting with the private exchanges, and moving on to publicly-traded companies — might contribute to a new bubble bursting anytime soon.
And yet, Yandex shares seem to be sharing the success of LinkedIn, with the "biggest technology IPO of the year" jumping 38% in the first few hours of trading. In fact, LinkedIn's IPO is being credited as having brought more attention (and value) to the Yandex opening. But, will this be sustainable?
Is It Sustainable?
Yandex — short for "yet another index" — is considered the Google of Russia, with a 65% market share in the country, as opposed to Google's 22%. Yandex also as a strong presence in certain European states like Belarus, Khazakstan and Ukraine. Yandex' business model is advertising-driven and has seen a steady rise, with a 90% year-on-year revenue growth in 2010. Its US$ 440 million revenue in 2010 is nothing to sneeze at.
For now, Yandex is not alone as a foreign technology company trading in the US markets. Firms like China's Renren and Youku are also publicly traded at NYSE. Are there warning signs of a bubble waiting to burst? Sure there are. But it's still anybody's market, and firms are making a killing, making millionaires — and billionaires — of those who have just the right timing.