After the World Health Organization declared the novel coronavirus outbreak in March 2020, many leading companies faced serious problems. If some small enterprises could not survive that turbulent time and were forced to liquidate their business, large international corporations were able to find a solution to withstand the crisis

For instance, one of the efficient ways to save the business was rebranding. In 2021, such global giants as Facebook, Burger King, Kia, Xiaomi, and many others announced a change in marketing strategy. Russian brands also resorted to this measure, e.g. Mail.ru Group.

In this article, we will talk in more detail about what the company had to change in its business model as well as find out the reason for the rebranding and how it affected its shares.

History of company

Mail.ru Group was founded in 1998 by programmers Evgeny Goland and Alexey Krivenkov. Originally, the service was called port.ru.

However, three years later port.ru merged with NetBridge Services, established by Grigory Finger and Yuri Milner. They changed its domain to Mail.ru. In 2010, the corporation was headed by Dmitry Grishin, the former CEO of NetBridge Services. In 2016, he left the position.

Notably, in the summer of 2014, the main beneficiary* of Mail.ru became Russian entrepreneur Alisher Usmanov.

In the same year, Mail.Ru Group entered into an agreement to acquire Bullion Development which owned 11.9% of shares in the country's biggest social network VKontakte, previously owned by Pavel Durov. After the deal, Mail.ru had a 51.99% stake in the company, becoming the biggest shareholder of VKontakte.

Currently, the main activities of the company include social networks and entertainment services. Importantly, Mail.ru Group owns three of the largest Russian social networks - Odnoklassniki, My World, and VKontakte, mail services, advertising, messengers, delivery service, educational portals GeekBrains and Skillbox, taxi service, and various media.

Apart from that, the corporation owns a large gaming platform - My. Games with a focus on the global market.

According to the results of the first half of 2021, about 50% of the company's revenue accounted for social networks and communication services and about 40% of profit it received from games.

*Beneficiary is a person who receives a benefit from a particular entity.

Rebranding

In mid-October 2021, Boris Dobrodeev, the CEO of Russian IT company Mail.ru Group, announced that the holding company would change its name to VK. Unlike Mail.ru Group, the new name was added to all products of the company.

Nevertheless, the most recognizable projects of the corporation such as Odnoklassniki, My. Games Platform, and Mail.ru retained their names.

The company's management explained its decision to rebrand the corporation by the fact that the VKontakte brand was more known to Internet users than Mail.ru Group. In addition, rebranding was a wise step given the ecosystem development strategy presented last year, which was based on the Vkontakte social network.

Dobrodeev is confident that rebranding will encompass all the areas of the updated ecosystem: communication, games, education, grocery delivery, car sharing, online shopping, etc.

At the same time, some experts believe that rebranding will not affect the work and earnings results of Mail.ru Group. Analysts say that the holding will be able to succeed only in case of a big change in the work approach and the creation of new products.

The final transition of the company to a new brand name as well as the rebranding of all its branches are planned by the end of 2022.

Mail.ru shares

The IPO on the London Stock Exchange took place in the fall of 2010. The initial price was $27.7 per share.

Currently, more than 70% of the total turnover in VK shares accounts for the Moscow Stock Exchange.

After the announcement of the rebranding, the company's shares rose by 10% in just a few days. At the same time, for most of 2021, stocks had been declining, losing more than 19% since January.

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The minimum trade size is 1 lot per share. To calculate the income, use the Forex calculator on InstaForex website.

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Dividends

Mail.ru Group pays dividends annually. The last dividend payments took place on March 18, 2013. Since then, no dividend payments have been accrued to shareholders.

In the spring of 2013, the amount totaled $4.3 per share. The annual dividend yield was 12.5%.

Currently, VK Holding does not plan to pay dividends to shareholders. The company intends to use profits for investments in the further development of its own products and ecosystem.

This decision will surely lower the attractiveness of its shares, making them less volatile. Thus, investors can only obtain profit from VK stocks on price swings.

Outlook

The majority of experts polled by leading Russian media believe that the rebranding will have a positive impact on the holding's medium-term revenue.

Nowadays, VK remains one of the largest media corporations in terms of users. The purchase of shares in the online education market has attracted a younger audience to its products, which is largely focused on TikTok and other popular platforms.

Analysts believe that switching to one name for all branches will strengthen the brand's image and increase its attractiveness to advertisers. That is why experts assess the long-term outlook of the corporation's shares as moderately positive thanks to buoyant development and the creation of its own ecosystem.

The company has also achieved stunning success in areas like Social Networks, Games, Online Education, and New Projects. As a result, the company is actively developing, each time striving higher.

Earlier, VKontakte launched free group conference calls for up to 2,000 users. Notably, the social network launched the VK email service. By the end of this month, the company plans to hold a corporate event to outline for investors its business results and share its plans for the future.

As for the company's comments on the rebranding, its representatives are confident that the current changes should have a positive influence on the revenue thanks to the unification of services and an improvement in cost efficiency.

According to VK's stats, the adds integration has already led to a threefold increase in the number of app installations and a 30% drop in the purchase price for advertisers. During the rebranding, awareness of the holding's products surged by 40%.

You can learn about the latest events in the VK company as well as in the IT sector around the world in real-time in the Forex Analysis & Reviews section on InstaForex website.

Conclusion

Nowadays, the opinions of analysts on rebranding results are polarized. This is the main reason for the weak dynamic of the company's shares in the stock market.

However, given the positive fundamental factors, VK shares are likely to rise significantly in the future. The corporate event for investors scheduled for November may assure investors of the bright prospects of the company, thus boosting the share price.

The global IT market continues to grow steadily, which means that VK shares have every chance of a further increase. Analysts also recommend adding stocks of this company in the long-term portfolios.

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