With a market capitalization of $1.6 trillion, Amazon.com (NASDAQ: AMZN) is now the fourth-most helpful publicly traded firm on this planet. However what in case you might return in time to 2002, and purchase Amazon when it was nonetheless low cost — say, about $6 billion in market cap? Would you want to try this?
As a result of in a method you would possibly be capable of — by investing in just-IPOed Ozon Holdings PLC (NASDAQ: OZON).
“Black Friday reductions on the entire universe as much as 90% off!” Picture supply: Ozon.
The Amazon.com of Russia
Headquartered in Nicosia, Cyprus for tax causes, Ozon Holdings does enterprise virtually solely in Russia, working as an internet-based purveyor of every part from toys to electronics, to furnishings, meals, and fast-moving client items. Along with promoting items itself, it permits third-party sellers to promote items on its web site. Its enterprise thus mirrors that pioneered by Amazon.com, which went public within the U.S. in 1997.
Ozon was established simply two years later, in 1999, by which era Amazon was already doing greater than $1 billion in annual gross sales. It is taken till 2020 for Ozon to cross the $1 billion gross sales mark. (The unique Amazon has racked up $348 billion in gross sales over the past 12 months, in accordance with information from S&P International Market Intelligence.) However having achieved that, the corporate felt it was lastly prepared to carry an IPO of its enterprise on the Nasdaq — and did so on Tuesday at an IPO price of $30 a share.
Earlier than making its preliminary public providing debut, although, Ozon filed an F-1/A submitting with the SEC, laying out its enterprise, its prospects, and its financials for potential traders to have a look.
Get to know Ozon
And what do we discover in that submitting? Let’s start with the fundamentals.
Ozon calls itself “essentially the most trusted and revered on-line retailer in” Russia, and says its identify “has grow to be synonymous with on-line procuring” within the nation. Market share-wise, nevertheless, Ozon is barely No. 2, with a 6.6% share of the Russian e-commerce market. The highest three home e-commerce corporations, which embrace bigger Wildberries and smaller Yandex (NASDAQ: YNDX) subsidiary “Beru,” management solely a complete share of 18%.
Nonetheless, Ozon is rising — presumably by taking enterprise from even smaller gamers. In a market the place e-commerce gross sales grew 51% year-over-year within the first half of 2020, Ozon’s year-to-date gross sales grew 70%. 8,100 sellers use Ozon to promote to clients numbering both 51 million (those that have downloaded its procuring app), 41 million (those that have ever shopped on Ozon), or 11.Four million (“lively patrons” who’ve used the service throughout the previous 12 months).
About 51% of Ozon’s gross merchandise quantity, or GMV, are gross sales immediately from Ozon to customers. 45% of GMV is high-margin gross sales from third events to customers carried out on Ozon’s Market. And but this hasn’t but turned Ozon right into a worthwhile operation. Though gross sales are rising strongly, and on tempo to hit 102 billion Russian rubles this 12 months ($1.three billion) on the present progress price, losses usually are not shrinking a lot (down lower than 2% year-over-year).
The end result: Ozon has already misplaced about $170 million thus far this 12 months, and is more likely to finish the 12 months with a internet loss.
What traders must know to value Ozon
Ozon offered 33 million American Depositary Shares on IPO day, Tuesday. It offered one other 4.5 million in a simultaneous non-public placement, and plans to promote almost 5 million extra shares as underwriters train their overallotment choices. (For those who’re counting, that is 42.5 million shares, complete). At an IPO price of $30, it will in the end elevate near $1.three billion to fund the corporate’s continued growth.
In line with its prospectus, the corporate will in all probability find yourself with 184.2 million ADSs excellent after the underwriters train their choices. And since Ozon shares appreciated sharply after their IPO, rising previous $40 a share, the corporate’s complete market capitalization is at the moment $7.Four billion.
Divided by my finest estimate of $1.three billion in gross sales this 12 months, that works out to a price-to-sales ratio of 5.7 — solely a bit richer than Amazon‘s valuation — and with extra room to develop.
10 stocks we like higher than Ozon Holdings PLC
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John Mackey, CEO of Complete Meals Market, an Amazon subsidiary, is a member of The Fintech Zoom’s board of administrators. Wealthy Smith has no place in any of the stocks talked about. The Fintech Zoom owns shares of and recommends Amazon and Yandex and recommends the next choices: quick January 2022 $1940 calls on Amazon and lengthy January 2022 $1920 calls on Amazon. The Fintech Zoom has a disclosure coverage.
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