The Evraz (LSE: EVR) share price has plunged by around 90% over the past week.
This is one of the fastest collapses of a blue-chip company’s stock price that I can remember.
Only a few weeks ago, the shares were changing hands for around 600p. It was a multi-billion pound company and one of the largest listed corporations in the UK, with a place in the FTSE 100. Now, it looks as if the stock is going to be kicked out of this blue-chip index.
The collapse in the value of the Evraz share price is a direct result of the Russia-Ukraine conflict. The group itself is not as exposed as some businesses. It has operations in Russia and Ukraine, but it also has a presence in the U.S. and other European nations.
However, international companies have stopped doing business with any organisations that have any exposure to Russia. What’s more, Roman Abramovich is the corporation’s largest individual shareholder. There is growing speculation that this Russian-Israeli businessman will face sanctions from Western governments.
A difficult and messy situation
Quite simply, Evraz is in a complicated and messy situation. But I would not write off the Evraz share price just yet. Its assets outside of Eastern Europe and Russia will still have a value.
Moreover, steel prices have been surging recently, and the company is vertically integrated. So it can supply itself with raw materials if third parties do not want to associate with Russian enterprises.
Unfortunately, trying to work out how much of the corporation will be left in a year’s time is almost impossible. It depends on what happens next in the global economy and geopolitical environment. If the situation becomes much worse, Evraz could struggle to survive in its current form even with its international assets. On the other hand, if the situation stabilises, the firm might be able to pull itself back from the brink.
Another option that I think is worth considering is the potential for a spin-off. The company could spin its international assets into a different business. This would allow them to remove any association with the Russian side of the enterprise and operate independently. As independent entities, these assets in the new firm will be able to capitalise on high commodity prices.
This is the best-case scenario, but once again, it would be difficult for me to place a value on this theoretical new business.
Evraz share price value
I am always on the lookout for companies that have fallen on hard times as, sometimes, these businesses can be great value investments.
The recent performance of the Evraz share price has ignited my interest. However, considering all of the above, it is impossible for me to try and determine how much the company is really worth. Even in the best-case scenario, if it spins off its international assets, I do not think the group will ever be worth as much as it was a few weeks ago (600p).
As such, I would not buy the stock today. I think there are plenty of other options on the market.
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
