The quotations of Yandex stocks demonstrate confident growth, as the whole Russian stock market does. The buyers have managed to secure above the important resistance level near 2545. By the way, this area has been attacked by the bulls twice; the first test took place in February 2018.
The second test happened in the middle of 2019, and only at the beginning of 2020 the prices broke this area out. However, Yandex does not pay dividends to the stockholders, as many other IT companies, so one can make a profit on Yandex stocks with the growth of their price only. Dividend payment is not an option.
What does Yandex make the most money on?
The company has a number of various services and products used by lots of users. What is more, Yandex keeps trying and creating new products, such as a smart loudspeaker with a voice assistant Alice or Yandex.Phone. All this activity is attempts to fight a share of users off other brands as well as to increase the company's income in the future.
Recently, there have been launched several new branches of development, due to which the main income of the company, based on search, somewhat shrank. Other promising services are meals delivery and taxi. Thanks to very high profits from advertizing, Yandex can afford to develop other promising areas of activity, such as bulletin boards, electronic commerce, or media services.
All these are regularly used and will be used by multiple users of the Net. It is hard to imagine that drivers will massively switch from Yandex.Navigator to other apps.
The income from search and ads remains high
The number of Internet users does not grow as quickly as it used to 5-10 years ago; the surplus is estimated as 2-3% a year. However, the number of users who access the Net via mobile devices grows significantly. People consume information from the smartphone screen more and more often, the number of such users increasing by 22% annually.
On mobile devices, Google search is normally installed by default. Moreover, Google pays Apple huge sums for the opportunity to integrate Google search in the Safari browser. However, on the Russian market, Yandex remain the leader on both mobile and desktop devices.
Thanks to the increase in the number of users of mobile platforms, the share of Yandex income from advertizing on mobile devices keeps growing while the income from ads on desktops declines. While at the beginning of 2018 the profit from ads on smartphones was 34% while that from the ads on desktops amounted to 66%, a year later the numbers were 45% and 55%, respectively. On the Russian market, advertizing in Yandex is considered more efficient than in Google, that is why Russian business people opt for Yandex. What is more, advertisers spend their budgets in search services, spending significantly less in social networking systems.
However, there is an opinion that the income from advertizing will not grow much. In the third quarter of 2019, Yandex took about 56.6% of the Russian search market. Even if advertisers start leaving the TV and radio, the market will not feel any huge stress. This can be deducted from the numbers in the company's reports. In the third quarter of 2018, the company's share was about 55.9%, while in the second quarter of 2019 it was near 56.9%.
On the other hand, Yandex takes quite strong positions here, Google is unlike to fight off a significant part of the search market. That is why, in the future, the income from advertizing will allow Yandex to invest in other projects and services that the company is already developing successfully. What is more, the growth of the profit from search and the company's portal amounted to 22% compared to 2018.
Yandex.Taxi demonstrates confident growth
In the company's report for the third quarter of 2019 it is said that the number of trips in the Taxi segment grew by 58% compared to the third quarter of 2018. The company's income in this segment is also growing noticeably, compared to 2018.
Yandex.Taxi is a service that belongs to Yandex and Uber. Yandex holds 59.3% of the stocks. The service works in 15 countries. Yandex develops its map service independently, thus cutting down on the price of trips, making routes better, and assigning orders more logically. For example, Uber buys such data from Microsoft. It is considered that the main part of the expenses of the service is the drivers' wage. However, Yandex is trying to decrease the service price here as well, developing autopilots. Of course, for this service to start functioning on a full scale, a lot of time is needed for its development along with large investments. It is not yet clear when this service will have a chance to become mass.
In perspective, Yandex may get access to the road haulage market, which is literally huge; this may also be a good source of income for the company, bringing several times more profit than ads on the Net.
Such services as Yandex.Job and Yandex.Real Estate are bulletin boards, were users can post their ads. In this field, there are also many rivals; there is an opinion that the main profit is made by the monopolist, other platforms remaining losing. Currently, Yandex is not a monopolist here, several other boards are more popular.
Here, we should also mention such mediaservices as Yandex.Plus, Kinopoisk, Afisha, and Yandex.Music. Unfortunately, there is no exact data on their profitability but many regard them as losing. According to Herman Gref, the Yandex.Market project aims at becoming Russian Amazon, and the company has all abilities for this.
Apart from Yandex.Market, the most promising services, according to many analysts, are Yandex.Zen and Yandex.Cloud. They demonstrate confident growth by more than 20% each every year. It is said that the two projects may be bringing some 50% of the profit in the segment. The flow of new users grows stronger and stronger every year.
A large number of services allow Yandex to keep its users inside the system. Regardless of the generally losing state of some of them, in the end, they can all demonstrate profitability. There is room for future growth, both online and offline.
Long-term analysis of Yandex stocks
On W1, we can see a confident uptrend. The RSI values are worth paying attention to. Since the middle of 2015, there have been only two tests of the area near 30, after which the prices started to grow. Even the decline of October 11th, 2019, provoked by the law about important informational resources, managed to push the prices off the resistance level just temporarily, and the moment of the test of the oversold area the prices went further up.
This fact indicates a good stable trend, from the point of view of tech analysis. Recently, the descending resistance line on the RSI has been broken out. Earlier, the indicator values pushed off this level. Of course, at the moment of the breakout, the market reacted positively to the plans of Mikhail Mishustin to support the Russian Internet company. However, the prices were above the level already, so the growth was quite expectable, and the news only sped up the development of the movement.
We can also contemplate bounces of the Moving Average, which also indicate a strong uptrend. Currently, we may suppose that a good support level is at 2525. In the case the price tests this area again, we can expect an attempt of further growth. The nearest resistance areas might be at 3600 and 4000, where the upper border of the ascending channel goes.
As for D1, we can see a breakout of the descending trendline on the RSI, after which the indicator values have tested the broken line several times, thus pointing at an important support level. As we may see, the quotations have managed to escape the mid-term ascending channel, so we should not exclude growth of the stock price for the width of this channel. So, the nearest goal of the price growth is at 3600. A good support level for the buyers is near 2800.
Presently, the main income of the company is generated by advertizing on the Net. On the whole, the search and advertizing market is growing. It is thought that the growth will continue by more than 20% annually. The company owns two promising projects functioning offline, which are Yandex.Market and Yandex.Taxi. The taxi service has already been demonstrating great development, and the volume of this market may in the end be much larger than that of Internet advertizing. Same with Yandex.Market: the company has both the chance and opportunities to become “Russian Amazon”.
All these factors, as well as possible state support may let the company grow as confidently and please its stockholders with new highs. However, many wait for Yandex to start paying dividends, which would become another large plus for strong growth. Moreover, the tech analysis of the securities also suggests further growth with a good support level around 2525-2750.