Russian's leading search engine company, Yandex, is set to tantalize investors with its May 24 IPO on the Nasdaq Global Market. The expected price is between $20-22. Yandex's Nasdaq symbol will be YNDX. The IPO will offer YNDX Class A shares. The capital structure will encompass Class B and Class C shares. Class B shares have preferential voting rights. Class C shares will exist to meet regulatory filing requirements.
The opportunity to invest in a leading search engine offers both high risks and high returns. U.S. investors and consumers possess keen insight into the massive inroads one search engine can achieve with brilliant employees and a streamlined business model. Google (NASDAQ:GOOG) offers stunning proof of significant revenue growth, high profit margins, a dominant North American search engine market share presence, and a no-holds-barred entry into new growth channels. This includes Google's mobile device Android introduction, video market domination via YouTube, and its highly acclaimed email offerings.
Yandex is competing head-to-head with Google. Yandex closed 2010 with a 64% Russian search engine market share versus Google's 22% Russian search engine market share. Yandex's IPO offers an intriguing opportunity to establish a position in a leading global technology entity. The significant growth prospects are tied directly to business execution. The business model is predominantly advertising, much like the North American Google search engine model. Growth opportunities exist in social network partnerships, enhanced mobile device offerings, and improving its consumer online-payment operations.
Yandex has continued to gain Russian search engine market share. In 2008, its market share was 55%. This number has continued to increase to a 65% as of March 2011.
The company, for fiscal year ending 2010, earned 44 cents per diluted share. The company will have approximately 320 million shares outstanding post-IPO. The company has been profitable since 1998. The company has a long history as a Russian Internet pioneer and is viewed as the premiere local Russian Internet search market provider.
As a local search engine enterprise, Yandex has developed solid distribution partners and an entrenched user base. The IPO provides funding to the company for further corporate initiatives and partner networking. The capital will play a key role in attracting prominent mathematicians and engineers. Human capital is vital to constantly improve the search engine algorithms.
The March 31st 2011 quarter provides a glimpse of the significant growth opportunities that await. Yandex had 92,000 advertisers in the first quarter of 2010. This number had increased to 127,000 in the first quarter of 2011. This 38% year-over-year growth in number of advertisers smooths out earnings and revenues going forward.
The company does not operate in a vacuum. Google, Facebook, and a myriad of other competitors exist or will exist in the future. Yandex's access to the capital markets is likely to be integral to the firm's continued success. The IPO is led by a stellar joint manager team of Morgan Stanley (NYSE:MS), Deutsche Bank (NYSE:DB), and Goldman Sachs (NYSE:GS). The company has a short-history of successful operations. The next chapter in Yandex's story will prove if continued success is in the cards.
Disclosure: I am long GOOG.