Yandex Stock Symbol: YNDX
Yandex IPO date: May 24, 2011

After several delays dating back to 2006, Russia’s largest search engine, Yandex.ru, has officially filed for an IPO with SEC. Yandex is currently the most-visited Web site in Russia and the 23rd most-visited Web site in the world (per Alexa). Here are five reasons you should consider buying stock in the Yandex IPO:

1) Dominating Google. There are, in essence, just two major markets that Google’s been unable to crack: China and Russia. Google.ru has made significant strides in recent years, but Yandex.ru still accounted for 64 percent of all the search traffic in Russia last year. Adding $1 billion to the company’s warchest via an IPO should help Yandex maintain it’s lead over the pesky folks in Mountain View, Calif. Yandex generates 1.6 times more pageviews than Google in Russia, according to the following chart from Alexa:

2) Lots of rubles. Yandex’s revenue is on pace to grow 22 percent this year from $439 million to $548 million, and that was good for $134 million in net income last year. Inexplicably, income was down in Q1 2011 to $28.8 million (a number that would give Yandex net income of just $115 million in 2011). Expenses appear to have spiked this year, presumably as the search engine faces increasing competition domestically and abroad. Still, Yandex is the undisputed online advertising leader in Russia, and it generates more revenue than any other Web property in the country, according to the company’s F-1 filing.

3) More servers, more data, more speed. Yandex will use the proceeds (likely $1 billion or more) from its IPO to invest in new servers and data centers. That should significantly boost the site’s speed and cement its place as the country’s leading search engine.

4) Explosive Internet growth in Russia. Russia’s internet market significantly lags development in the U.S. That puts the country’s internet market in the fat part of its growth curve. As of 2010, just 60 million Russians had access to the Internet. That’s roughly 43 percent of the country’s population. A chart from Yandex shows how quickly Russia’s Internet user base is expanding (via SiberianLight):

5) Investors love search engine stocks. Pure play search engine stocks are something of a rarity. Outside of Yandex.ru, there are really only two others we can look to for comparison: Google Inc. (NASDAQ:GOOG) and China’s largest search engine, Baidu.com, Inc. (NASDAQ:BIDU). Since its IPO in 2004, Google’s shares are up nearly 400 percent (although they still trade below highs set in 2007). Baidu’s up more than 1100 percent since debuting on the NASDAQ in 2005. So long as Yandex can retain its leadership slot in Russian search, history should repeat itself again and give us a winning stock.

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Tags: BIDU, GOOG, search engines, Yandex.ru, YNDX

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