Russian internet major and the country’s most valuable digital company prior to the military invasion of Ukraine Yandex is suspending “many” of its planned investments both domestically and abroad, The Bell wrote citing a 2021 report of the company to the US Securities Exchange Commission (SEC).
As suggested by bne IntelliNews, the ecosystem model of the development of Russian tech, finance and telecom is expected to be significantly slashed as companies are stranded for cash through feeling the effects of Western sanctions for the military invasion of Ukraine.
Yandex was Russia’s leading developer of AI and driverless technologies. Prior to Russia's military invasion of Ukraine, Yandex was hailed as a global technological runner-up, looking to boost the monetisation of its technologies on the one hand, and leverage these technologies to support its international expansion on the other.
In 2021 Yandex for the fifth year in a row topped the list of most valuable tech and internet companies with a valuation of $23bn. Apart from e-commerce, its investment case previously rested on developments in transportation, FinTech and foodtech, with the developed ecosystem seen as a key advantage.
The press service of the company commented that it will continue investments in core segments such as online search, transportation and streaming, but will suspend “new and experimental” service investment.
According to separate reports, some of Yandex's growing but loss-making businesses are already running into trouble. The carsharing service Yandex.Drive could lose up to 35% of its car park in 2022 and might have to increase prices by up to 20% due to the looming crisis in the carmaking and car leasing industry, Kommersant daily reported citing unnamed market sources.
The foodtech vertical of Yandex (Yandex.Lavka e-grocery delivery, Yandex.Kitchen, and others) could run into operational problems and low demand. The fast-moving consumer goods delivery in the first week of April declined by 10%, according to NielsenIQ cited by Kommersant. Analysts surveyed by the daily attributed the decline to the exodus of its main clientele – tech-savvy young urban professionals – and to expectations of lower income and higher uncertainty from the rest of the shoppers.
In the meantime, in its SEC filing, Yandex also suspended its guidance for 2022, previously expecting revenues of RUB490bn-RUB500bn versus RUB356bn revenues in 2021 (up by 54% year on year in 2021). The report to the SEC stressed that none of the directors or managers are sanctioned by the US, EU or UK, but failed to mention the cascade of top-level resignations that followed the sanctioning of Yandex Deputy CEO of Tigran Khudaverdyan.
Fitch Ratings has cut Yandex and other Russian TMT majors to junk-rate B, noting that "the rating actions reflect the severe shock to the operating environment in Russia and weakened financial flexibility, and follow the agency's downgrade of Russia's sovereign ratings". Previously Nasdaq-traded Yandex has announced the default procedure started by its bondholders.