Is This The Hottest Penny Stock To Buy Now?

The Russian invasion of Ukraine has disrupted the global economy, and consumers around the world are feeling the impact. Sanctions on Russian individuals, businesses, and entire industries have had unexpected consequences, and the loss of Ukrainian exports is changing how entire counties manage food supplies.

It was foreseeable that economic sanctions against Russia would affect the Russian market, and it goes without saying that Russian stocks and funds focused on Russian indexes have lost tremendous value. What is unexpected – and likely unintended – is the repercussions of Russia’s war in Ukraine on VEON, a telecommunications company based in the Netherlands.

VEON stock lost more than 66 percent of its value since the start of 2022. In the week after Russia invaded Ukraine, VEON stock hit a 52-low of $0.24 cents per share. Normally, penny stocks are considered extremely high-risk – speculative, really – and only suitable for investors who can tolerate substantial losses.

However, some are saying that VEON is the hottest penny stock to buy now. Is VEON stock the exception? Is VEON stock a buy?

VEON Has 220 Million Customers In 9 Countries

VEON is a communications and connectivity company with 220 million customers in nine countries. Two of those nine include Russia and Ukraine, which has put VEON in the center of what some are calling the most dangerous situation in Europe since World War II.

VEON’s Russian and Ukrainian customers make up a third of the company’s total consumer base, and between the two countries, VEON has 33,000 employees working hard to keep everyone connected. Some have been recognized in international media reports for their dedication to Ukrainian refugees whose mobile devices serve as their lifeline when fleeing violence.

Employees have made it a priority to keep transmission sites operational, and the company has constructed more than 120 additional base stations in recent weeks. In addition, VEON has partnered with Starlink to create more reliable service should transmission sites and base stations fail.

Is VEON A Russian Company?

VEON is emphatically not a Russian company. It is headquartered in the Netherlands, and it operates in nine markets: Algeria, Georgia, Kyrgyzstan, Uzbekistan, Bangladesh, Kazakhstan, Pakistan, Russia, and Ukraine.

VEON is not the subject of any economic sanctions, and it provides an essential service – communications and connectivity – to millions of consumers, including consumers in Russia and Ukraine.

The Russian invasion of Ukraine has created extraordinary challenges for the company as it continues to provide service in both regions. While that has slowed VEON’s ability to grow and expand its network in Russia and Ukraine, the company persists in its attempts to deliver exceptional service throughout its footprint.

Fitch Downgraded VEON To “Junk”

The term “penny stocks” is an expression rather than a literal assessment of a company’s value. Generally speaking, stocks in this category trade at very low prices, their volume is limited, and the companies are small. Penny stock market caps are typically under $100 million. The technical definition is a stock trading at a price level under $5 (not $1 as most expect).

Aside from the fact that these stocks usually have low values because the underlying companies are struggling, penny stocks are considered high-risk because they are popular among market manipulators and con artists. At best, penny stocks are speculative, and investors should proceed with extreme caution.

VEON is certainly in the high-risk category at this time. Both Fitch and S&P have downgraded its rating, and it is now in the “junk” category. However, VEON has certain characteristics that set it apart from the average penny stock. One of the most notable is the fact that VEON’s rating is higher than that of Russia. For those willing to take a risk, VEON stock could prove lucrative long-term.

Is VEON Stock A Buy?

VEON stock went down precipitously just after the Russian invasion of Ukraine. It has since recovered a bit, gaining 62 percent over the past month, and analysts are beginning to show signs of optimism.

In an April 13, 2022, letter to stakeholders, Chief Executive Officer Kaan Terzioğlu pointed out that the company has enough cash to weather the current political storm.

Its cash position at the HQ level is roughly $1.3 billion, and VEON has another $700 million worth of credit available if needed. It does not have any debt maturing at the HQ level for the rest of the year.

The operating companies are also in a solid position from a cash perspective, suggesting that they can remain stable despite the disruption caused by Russia’s invasion of Ukraine. The current cash position of VEON’s operating companies is around $500 million, and each subsidiary is well-positioned to continue independent, self-sufficient operations in their respective markets.

For the moment, the biggest question is whether VEON will be able to hold onto its Nasdaq listing long enough to regain its stability. The war-related upheaval took VEON’s stock price below the $1 per share minimum required for a Nasdaq listing, and on April 7, 2022, VEON received a warning letter that it could be delisted.

VEON leadership is working with Nasdaq to resolve the delisting concern. Assuming it is successful in delaying this threat for a time, the low per-share price could be an opportunity for bold investors with a high risk tolerance to buy VEON stock so as to benefit if VEON stock fully recovers.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.