The Yandex IPO Verses the Linkedin IPO: Trying to Pick a Winner – YNDX, LNKD, BIDU
I’d wait for the Linkedin IPO and Yandex IPO froth to come off the market before jumping in to purchase either stock.
Over the last two weeks, LinkedIn Corporation (NYSE: LNKD) and Yandex NV (NASDAQ: YNDX) had their IPOs and proved that tech and Internet IPOs, perhaps along with tech and Internet IPO bubbles, are back in vogue. First, professional networking site Linkedin debuted last week at $45 a share and soared to over $100 amidst some charges that Linkedin’s bankers scammed the company out of hundreds of millions of dollars. This week and thanks in part to Linkedin raising the IPO temperature, Russian Internet search engine Yandex had its IPO at $25 a share and shot up to almost $40 a share on the same trading day.
Starting with Linkedin, its definitely one pricey stock and worst, the short sellers are already starting to swarm around it. Once the insiders start selling, the stock could easily sink back below its IPO price. On the other hand and as a heavy user of Linkedin, I don’t believe that Linkedin has tapped its full potential as a business. Certainly there are plenty of other professional and social networking sites out there but Linkedin seems to have the most universal and global appeal – like Facebook. Moreover, it’s the ultimate Monster.com for passive and semi-active job seekers. Just put your profile up there rather than your entire CV and let the recruiters find you. The site is also great for sales and business development people to find appropriate contacts.
I also don’t believe that Linkedin has fully monetized their site yet. Sure, they really jacked up the costs of individual memberships (I had held one a few years ago) that are more geared for job seekers and recruiters but they do not seem to have tapped the full potential for revenues from corporations and advertisements. Nevertheless and unlike with other dot.com stocks that debuted at the end of the 1990s, Linkedin is profitable (albeit small profit margins in the 5% range) – although just barely because the company has been focused on the build out.
On the other hand and for me, Yandex is a far more interesting stock. Unlike Baidu (Nasdaq: BIDU) which bested Google (Nasdaq: GOOG) thanks to help from the government, Yandex came to dominate the Russian Internet market (a 2/3rds market share) on its own. Russia, with the largest population in Europe, is easily Europe’s biggest Internet market but less than 50% of the Russian population are online right now. Hence, there is still room for Yandex to grow.
However, it should also be remembered that although Russia is BRIC country, its unlike other BRIC nations. For starters, Russia’s population continues to decline. Moreover, its GDP and middle class are not on solid footing either. Hence, there is a limit to the advertising growth and advertising revenue that Yandex will achieve verses Baidu. Moreover, Yandex dominates the Cyrillic Internet world, which basically consists of Russia and a few other Eastern European countries where the Cyrillic alphabet rather than Latin alphabet is used. Nevertheless and like Linkedin, Yandex is profitable and unlike Linkedin, Yandex probably can be assured that its dominance of Russia and the Cyrillic world will continue.
The bottom line: Although both stocks look very interesting, I’d wait for the Linkedin IPO and Yandex IPO froth to come off the market before jumping in to purchase either stock.
John Udovich is a paid contributor of the SmallCap Network. John Udovich's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.
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| Date: | May 19, 2013 | |
| Price: | Free | |
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