Another Internet stock offering got a rousing reception from investors.
Search engine firm Yandex, dubbed Russia's Google, went public on the Nasdaq market at $25 a share and rocketed to close Tuesday at $38.84 for a 55% first-day gain.
The deal came less than a week after Silicon Valley social networking firm LinkedIn Corp. soared 109% in its debut, reviving memories of the dot-com mania of the late 1990s.
Yandex sold 15.4 million shares in its IPO while some shareholders sold 36.8 million. The total of 52.2 million shares raised $1.3 billion, making the deal the biggest tech IPO in 2011.
With 321 million shares now outstanding, the Moscow-based firm has a market value of $12.5 billion — a small fraction of Google's market value of $166.9 billion but not that far from Yahoo Inc.'s value of $21 billion.
Yandex's revenue of $440 million last year was a sliver of Google's revenue of $29.3 billion.
In the prospectus for the IPO, Yandex calls itself the "leading Internet company in Russia." The firm said it had 64% of all search traffic in Russia in 2010, compared with Google's 22%.
The company, founded in 1997, last year earned $134 million, or 44 cents a share. That gives the stock a price-to-earnings ratio of 88. Google's stock price is about 20 times its 2010 per-share earnings.
Russia's economy has great growth potential, and that obviously is drawing investors to Yandex. But besides the normal risks faced by any young company, Yandex's prospectus lists a host of hazards specific to doing business in Russia.
For example, "well-funded, well-connected financial groups and so-called 'oligarchs' have, from time to time" tried to take controlling or minority stakes in attractive businesses in Russia through the apparent use of "economic or political influence or government connections," the prospectus says. "We may be subject to such efforts in the future and, depending on the political influence of the parties involved, our ability to thwart such efforts may be limited."
Still, in an interview with Reuters, Yandex Chief Executive Arkady Volozh, 47, said that "Russia deserves to have a technology company of a global level" and that Yandex wanted to fill that role.