Yandex IPO oversubscribed 17 times

On the back of LinkedIn’s IPO success, the Russian search engine Yandex NV is forecast to perform well on the Nasdaq Stock Market today.

Yandex priced its initial public offering at $25 a share, above its expected range, giving the company a value of more than $8 billion – 500 times its worth when private equity investors bought into it in 2000.

Yandex generated sales of $445 million last year, up 43%, while earnings rose 90% to $135 million, according to Reuters.

The search engine, which says it dominates 65% of Russia’s search market (compared to Google’s 22%), is offering 15,400,000 Class A shares, and selling shareholders are offering 36,774,088 Class A shares – 16.2% of its enlarged equity.

Last week, social networking site LinkedIn saw its shares jump 90% in its public trading debut. LinkedIn shares rose to $85.18 in morning trading on the New York Stock Exchange, 89.3% above their initial $45 public offering price.

PwC suggests that based on value per user metrics, social media companies compare favourably with established telecoms operators and broadcasters. However, LinkedIn’s active users (74 million) are only valued at £34 each and by comparison, each Vodafone user is valued at £323 and Virgin Media user at £858.

According to Deloitte, the average revenue per user of social networks should reach $4 this year, while social network advertising average revenue per user will reach £3.50.

Deloitte estimates worldwide social network users to reach around one billion this year, meaning total average revenue per user should equal $4 billion.

The Deloitte report works out ARPU like this: For example, Facebook ’09 revenue neared $800 million. The company started 2009 with the January announcement that it had reached 150 million users. By December, that number had swelled to 350 million. ARPU = 800/350 = $2.3

However, it is a bit like comparing apples and pears as it is not clear what calculation others use.