Why are Yandex and Mail.ru cheaper, and what does it mean
From the beginning of 2014, the Russian RTS stock index fell by 14% to 1,120.2 points. At the same time, shares of the Russian technology giants Yandex and Mail.Ru Group fell in price much more - the securities of these issuers fell by 35% and 37%, respectively. Analysts polled by RBC journalists said that such a decline may be due to external factors.
Is there any reason in the current conditions to purchase shares of these companies, and if so, how to do it?
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Steep dive
In early January, Yandex shares on the American NASDAQ were priced at $ 42.63 per share, in the fall (data on Friday, October 3) the price did not exceed $ 27.67 - in the first nine months of this year, the price decline was about 35%. During this same time, the capitalization of the Russian search giant decreased by $ 4.8 billion and amounted to $ 8.883 billion.
Mail.Ru is not doing any better - the holding has lost $ 3.4 billion in capitalization and is currently valued at $ 5.855 billion. The shares of this company are traded on the London Stock Exchange - in early January the price per paper there was $ 44.22, and on October 3 it was $ 28 . This means that the price has dropped by about 37%.
From January to October 2014, the Russian RTS stock index lost 14% - analysts point out that comparing with this index makes sense, since it is calculated in US dollars and it is in this currency that securities of Russian technological giants are traded.
The RTS index takes into account the indicators of 50 large companies from various sectors, including from the real sector - LUKOIL, Gazprom, Uralkali. Another index, with which it makes sense to compare quotes - Nasdaq - increased in the period from January to September by 7%.
Fundamental indicators
According to the reporting for the first half of 2014, the revenue of Internet companies has increased - Yandex was able to increase it by 34% (23 billion rubles), while Mail.ru revenue grew by 22% (15.1 billion). Financial analysts consider Yandex indicators to be good, but Mail.Ru Group’s growth was not fast enough. Both companies depend on the state of the advertising market, since it is advertising that brings them significant income.
Yandex depends almost entirely on advertising revenue (99% of revenue), Mail.Ru receives 31% of its revenue from it. According to experts of the advertising market, in particular, the Association of Communication Agencies of Russia, the cost of Internet advertising in RuNet has increased - in the first half of the year, the increase was 20% to 38 billion rubles. Thus, Yandex grew faster than the market, while Mail.Ru lagged behind it, RBC experts emphasize. At the same time, both companies recorded a drop in revenue from banner advertising - Yandex lost 6% of its income, and Mail.Ru lost 10%. This fact was explained by the organization by an unfavorable economic and geopolitical situation.
The takeovers made by the companies in 2014 had practically no effect on their capitalization - Yandex bought Auto.ru for $ 175 million, as well as services AdFox, PriceLabs, Parascript. Mail.Ru, in turn, managed to concentrate in its own hands the management of the largest Russian social network VKontakte, having bought its share of 48% from the UCP fund - after the announcement of the deal, Mail.Ru's shares went up only 3% to $ 30.9 per share .
The fall in quotations was due not only to common causes for all Russian companies - a downturn in the economy, an unfavorable political situation - but also investors' concerns about a possible increase in control over the Runet. After the adoption of the amendments to the Law "On Information" (the law on bloggers), as well as statements by politicians (including the President of Russia) that "the Internet was conceived as a special project of the CIA", the value of shares of Internet companies decreased.
After it became aware of consultations about the disconnection of the Russian network segment from the world Internet “in a critical situation”, the shares of technologically giants also sank in price - despite assurances from politicians that they did not want to restrict access to the network, Yandex lost 5% of its cost - The price fell to $ 26.45 per share, while Mail.Ru shares depreciated by 4% (to $ 26.99).
Do I need to buy, and how to do it
Analysts polled by RBC say that usually the reaction of the stock market is not negative news from Russia does not last longer than a week - after the "slump", the stock price is restored. Those investors who have already bought shares of Yandex and Mail.Ru do not recommend getting rid of the securities - Mail.Ru shares are advised to acquire and retain Yandex papers.
The chief economist of ITinvest Sergey Egishyants does not agree with the method of calculation in the RBC material:
In the RBC material, comparisons are incorrect in principle - they compare dollar indices and dollar prices of firms' shares, and then talk about business expansion based on ruble indicators: but what's the point if the dollar-ruble has grown by more than 20% since the beginning of the year?
If companies generate revenues and profits in rubles, then they should be counted in them - then the fall in stock prices will not be 37%, but only 23%. This is a lot, but not so scary. The same applies to calculations for April and so on - it suffices to remember where our entire market flew away (especially in dollars) and the accompanying political environment in order to stop seeing conspiracies where there are none. Well, the fact that "Russia is sold" this year is not a secret (geopolitics is to blame); The fact that hi-tech usually falls (but grows) faster than the market as a whole is also, so out of general considerations, nothing much happens.
You can buy Yandex shares in two ways - on the American stock exchange Nasdaq, or on the Moscow Exchange. In the summer of 2014, the search giant conducted an additional placement of shares on the Russian stock exchange. In order to purchase securities on it, citizens need to take the following actions:
- Open an account in a brokerage company that provides access to the Moscow Exchange markets and has a corresponding license (such companies include ITinvest);
- By bank transfer or on hand to deposit funds into this account;
- Install special trading software - a trading terminal - and buy shares with it.
It is important to remember that the exchange and the broker charge a fee for executing operations on the stock market (the exchange commissions can be viewed on a separate page , and the exchange and brokerage fees are taken into account in the fees on the ITinvest website).
To purchase Yandex shares on Nasdaq and Mail.Ru on the London Stock Exchange (LSE), you also need to sign an agreement with a broker, but in a particular country (this is not so easy to do). Some Russian brokers have partners in the US and the UK, which allows them to connect clients to trading on foreign sites.
In order to trade on these stock exchanges, you also need to contact your local broker to open an account (which is not so easy to do), or find a Russian broker who provides access to trading. The shares of Yandex, which we are considering today as an example, are being traded on the NASDAQ, respectively, a Russian broker who has access there will be needed.
In a situation when a network user does not want to become an investor in the full sense of the word, but plans to acquire a single share of a technology company of interest to him (for example, “Facebook”), it is worth using the services of special intermediary websites that allow you to purchase one share at a market price without opening a brokerage account.
You can do this, for example, using services like GiveAShare.com , OneShare.com or Uniquestockgift.com (there are no shares of Russian companies) The buyer needs to select the company of interest and fill out a small form. The certificate of share ownership can be “decorated” with various frames or plates with engraving.
If you want to buy stocks, it is always important to remember that actively trading with them in order to extract speculative income without proper experience is quite dangerous - it is better to practice on a test account with virtual money - the Moscow Exchange has a completely virtual stock market that is no different from present. Virtual securities of Yandex are also traded on it.
Attention! In ITinvest, a vacancy for a GUI C # developer has opened, the job is to implement front-end development of software products for trading on the exchange. Details on the link www.itinvest.ru/about/vacancies/programmer-gui-c .
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Source: https://habr.com/ru/post/239713/
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