Yandex (YNDX) is a Russian technology company that provides multiple services such as search engines, ride-hailing, food delivery, online marketplace, autonomous vehicle, and more. The company operates mostly in Eastern Europe with countries like Russia, Ukraine, and Turkey. It is the second-largest search engine in Russia with over 40% market share and the fifth largest search engine in the world only behind Google (GOOG), Baidu (BIDU), Bing, and Yahoo.
The company was primarily a search company with services such as image and video search, maps, Yandex mail, and Yandex translate. Over the years the company expanded its footprint into multiple sectors such as ride-hailing, e-commerce, cloud, and media business. The company is also one of the leaders in autonomous vehicles, it is already using its self-driving taxi for food delivery service in Russia. This video is a demonstration of the Yandex driverless taxi on the streets (https://www.youtube.com/watch?v=gfWjsKsEry0). The company recently partnered with Grubhub (GRUB) to provide robot delivery on US college campuses.
The company’s stock is a hidden gem in the market. The stock has dropped 30% from its peak in November and we believe it provides a good buying opportunity. In the last quarter, Yandex grew revenue by 52% to $1.25 billion and is estimated to generate $4.85 billion for 2021. At the current price, the stock is only trading at a price to sales (P/S) ratio of 4.5 which is cheap compared to other tech companies. Yandex has multiple revenue streams that are growing quickly and it is forecasted to grow at a CAGR of around 35% from 2021 to 2025. The price to earnings (P/E) ratio is quite high at the moment but it is forecasted to drop to 29 in 2023. Yandex is essentially Google of Russia with a strong moat. With the company’s market cap at only $21 billion, while growing quickly, we believe the stock is undervalued.
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