Amsterdam-based Nebius Group is set to re-enter trading on the Nasdaq exchange, stirring expectations of volatile activity among investors as trading resumes on Monday. This development marks the revival of a previously suspended listing originally held by the prominent Russian company Yandex, often referred to as "Russia’s Google." Trading for this stock was halted following Russia's invasion of Ukraine in February 2022, during which it traded under Yandex's ticker through an Amsterdam-based parent company.
The landscape has dramatically shifted since Yandex's demerger. In a significant $5.4 billion restructuring deal concluded in July, Yandex separated its Russian and international business operations. This strategic move resulted in the formation of Nebius, which now seeks to establish itself as a major player in the burgeoning AI cloud sector.
The market capitalisation of Yandex once soared past $30 billion, largely driven by its robust business in online search, advertising, and ride-hailing services. However, these profitable divisions were retained within Russian borders, leaving Nebius to navigate a new business path focusing on AI infrastructure services. This strategic refocus sets Nebius apart as a wholly different investment option, centred on AI cloud services and providing Nvidia graphics processing units (GPUs).
As the company prepares to commence trading, it comes with a free float of 78.1%, primarily owned by Western investors and funds. According to Denis Buivolov, a personal investor in Nebius and the head of research at BCS's venture capital and pre-IPO department, this composition is likely to result in extreme volatility in the market during the initial days of trading. Buivolov's analysis, featured on the financial website Seeking Alpha, estimates the current valuation of Nebius at approximately $4.6 billion or $23 per share. This valuation draws parallels with companies such as CoreWeave, Lambda Labs, and Sacra.
Adding another dimension to the investor outlook, a shareholder, whose investment once had a valuation of around $200,000, indicated the possibility of increasing their stake should the stock price fall significantly. This viewpoint reflects anticipation of a market correction driven by investors offloading previously devalued stakes.
Dr Jan-Oliver Strych, an advisor to his family fund that holds investments in Nebius, highlighted the dual factors influencing the stock’s valuation. He pointed to a balanced scenario where positive liquidity due to heightened AI investor enthusiasm could counterbalance the impact of sellers exiting the market.
Looking ahead, Nebius is positioning itself for significant expansion within the AI and cloud services arenas. The company expects a substantial increase in its revenue, projected to triple or quadruple to reach between $500 million and $700 million by 2025. To support this ambitious growth strategy, Nebius plans to invest between $600 million and $1.5 billion in capital expenditures. These funds will augment its data centre capacities in strategic locations, including Finland, France, and North America.
With its return to the stock market, Nebius is poised to capture a segment of the rapidly expanding AI infrastructure market, navigating a path distinct from its Yandex origins. This transition sets the stage for potentially unpredictable trading sessions in the immediate future, as investors closely watch how this venture unfolds in the competitive field of AI technologies.
Source: Noah Wire Services