What in the world is going on with Yandex (NASDAQ:YNDX) today? Shares of the “Google of Russia” are down over 39% after it was announced that Russia had started its invasion of Ukraine. Making matters worse, the internet search company has lost more than 70% of its market capitalization since the start of the year. Now, with President Joe Biden imposing additional sanctions on Russia, investors are growing increasingly nervous about YNDX stock. Furthermore, the exchange-traded fund (ETF) VanEck Russia ETF (BATS:RSX) is down more than 14% today.
Why Is YNDX Stock Down Today?
Shares of Yandex are getting hit due to Russia’s invasion of Ukraine and President Biden’s corresponding sanctions. Since the search engine provider has not reported any company-specific news, it can be implied that the share price is falling for macroeconomic reasons. However, macroeconomic factors can ultimately affect a company the same way company-specific news can.
Today, Biden announced additional sanctions on Russia in response to its attack on Ukraine. Biden stated that the sanctions will target $1.4 trillion in assets and also several Russian banks, such as the state-owned VTB Bank. In addition, Biden has also included measures targeting Russian elites and their networks. These sanctions were utilized in an effort to isolate Russia from the rest of the world.
Should You Buy Yandex?
Stocks that are at risk of geopolitical tensions are always risky investments. However, Yandex is currently trading at a five-year low. In addition, investor sentiment toward Russian stocks is currently very negative. On top of that, Yandex is now trading at its lowest price-to-sales and enterprise-value-to-sales ratios since it listed on the Nasdaq exchange in 2011. As Warren Buffett once said: “Be fearful when others are greedy, and greedy when others are fearful.”
Yandex reported Q4 earnings earlier this month. In the investor presentation, the company highlights how it is the most popular website in Russia and 14th most popular globally. Yandex is also no. 1 in Russia for digital advertising, ride-hailing and as a video-on-demand platform. Moving further, the company reported revenue of RUB 110.3 billion, up 54% year-over-year (YOY). Additionally, its share of the Russian search market rose half a percent YOY to 60.2%.
The self proclaimed “leading ecosystem of Russia” is at a major inflection point. While valuation multiples are at an all-time low, geopolitical tensions are extremely high and could cause volatile price movements. Investors should ask themselves if the low valuation is worth the geopolitical risk before making an investment decision.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.