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Yandex and Mail.ru rally after April collapse

0 5 May 2014

The value of shares in Mail.ru fell sharply on the London Stock Exchange in late-April, dropping as low as $24.51. This is significantly lower than the $27.7 per share Mail.ru Group offered when it held its IPO four years ago. Although the share price has subsequently rallied to $28.8, it is still way down on the $44.2 price at which it peaked on January 2nd. 

Mail.ru Group has published its results for the first quarter of this year, which were in line with analysts’ expectations. The group also forecast growth for 2014 to be 22-24%. 

While these figures certainly don’t indicate a company in crisis, Mail.ru Group explained that the complicated economic climate and geopolitical situation have led to an increase in uncertainty, which has triggered the plummeting share price. They affirmed, however, that market conditions are still favourable and the fundamental prerequisites for business growth remain unchanged. 

Earlier the director general of the group, Dmitri Grishin warned that excessive internet regulation, when internet companies should in fact be working in harmony with government, “will lead to our country losing the internet as a sector with the unique potential to be the basis of Russia’s new post-industrial economy”.

He also warned about the adoption of the new “Anti-terrorist package” bill, which obliges internet companies to store users’ data and to pass it on to law enforcement services, and, in the eyes of the law, essentially gives bloggers the same status as the mass media. 

According to Grishin, the fact that Russian companies have, for a long time, not been subject to strict regulation has led to the country being “one of the very few in the world where local companies play a leading role in email, social networking, online gaming and searches.”

Shares in Yandex, the largest company on the Russian internet, also hit their lowest point late April, falling to $23.7 per share, less that the $25 price offered at Yandex’s 2011 IPO.While the price has been in decline all year, an rapid 11% fall on 23rd April, which took it below $24, was put down to controversial comments made by Russia’s president, Vladimir Putin. He described the internet as a “special project of the CIA” and suggested that Yandex, Russia’s most popular search engine, was ‘pressured’ into having so many European and American board members. 

Yandex’s share price has currently recovered slightly, to $26.53. However, it is still way below its January peak of $44.22.

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