), the Google of Russia, is +4.5% today and now +9% in 3 days
after the drubbing of EM and Russia saw a lot of momentum players
sell stock and some directional players shorting stock.
While it is not surprising to see current indiscriminant selling
of EM stocks, especially those that have had big moves higher in
the preceding months, it is hard to understand how Yandex was
sold off 20% in 2 weeks.
Know this about Yandex: this is a "national champion"
stock in Russia which means that the government believes this
company is representative of the strength of Russia and that
it should compete on a global stage with other players of
similar resources and prowess.
What is this "strength of Russia"? In Silicon Valley,
and around the tech globe, this is world class programming and
Russians are at or near the helm of some of the world's most
sophisticated tech companies (see Google for example).
Yandex has held off losing market share to Google in Russia
for years. In fact, Yandex has the same market share as it
held in 1997 (62-64%) despite expectation that Google would
dominate once they truly entered the market to take on the local
There are very few companies who can compete with Google
globally. Yandex is one (Bidu the other).
Also know that in emerging markets, from an eCommerce
perspective, the search model is the preferred gateway (more than
social media). Search dominates in EM, and mobile is
Mobile pricing for Yandex is structurally advantaged, and as
the move to mobile broadens, YNDX is better positioned than Baidu
) or even Google (
) to see higher profitability from their growth.
Yandex delivers 40% growth at 35x EPS, which means that
growth/value ratio is better than Google and Bidu, both companies
that I think offer very attractive growth for a reasonable
Lesson: When the sky is falling in emerging markets it
is difficult to close your eyes and buy quality and valuations
that are compelling. Yandex is a classic case of an
opportunity you need to do your work on and buy when there is a
For traders, however, most people who follow the stock, were
more interested in selling at $35.00 a few days ago and now are
tempted at $38.75 because the broader panic has left EM...for