Following a successful trade day seeing a 16.7% gain, stock for VEON Ltd. (VEON) continued its growth momentum into the after-hours. After market growth of 8% pushed VEON a near 26% above its previous close, impressing market participants along its wake. This growth spurt is a continuation of a rising bull observed since Tuesday, following two weeks of relative inactivity. The Amsterdam-based telecommunications giant has frequently made the news throughout the entire week, impacting price movement in an according to manner. One reason as to why VEON in particular is being assessed by extra market scrutiny relates to its origins. Although headquartered in the Netherlands, the multinational is technically a Russian company, that was founded in Moscow in 2009.
VEON Ups and Downs during the Week
For the most part of the company’s tenure as a publicly traded entity, its financial performance has been on a down. The primary reason for this is the weakening position of the Ruble against a strengthening US dollar. Furthermore, the company understandably took a plummet following the conflict in Ukraine and subsequent sanctions targeting Russia’s economy. This severely came as a red-flag, given the company’s largest market (constituting over 50% of its earnings) is within Russia. Similarly, Ukraine alone delivers around one-fifth of its total earnings, putting its prospects under severe duress.
Following this initial panic in the market, the stock steadily climbed in early March. This was after it was clear to the market, its Russian earnings may not see significant impact. This was a result of the nature of its market offering. More recently, VEON had announced a full retirement of its $259M loan with the Russian state bank, VTB. The total debt retired during the month had amounted to approximately $400M, putting investors at ease amidst the wider disruptions. This protected company finances from a dwindling Ruble, increasingly hit by US-led sanctions.
Letter by VEON CEO Delivers Further Optimism
Moreover, VEON investors breathed a sigh of relief following a letter by the CEO addressing the impacts of potential sanctions. The CEO emphasized that the company was not legally subject to sanctions by the US, UK, or EU. Moreover, two Russian board members that face sanctions had resigned from their positions. The letter further emphasized the strong liquidity profile VEON holds deemed robust by both Fitch and S&P Global. The CEO pointed out details of the company’s $2.1B cash equivalents in banks around the US, Europe, and Japan.
The reason for the optimism surrounding VEON, despite being a Russian company relates to a range of factors. These broader factors, along with a promising letter by the CEO of certainly led to positive market response.