What happened
Veon(NASDAQ: VEON) stock beat the market by a wide margin on Wednesday, with shares rising 33% by 3:15 p.m. ET compared to a 2% spike for the S&P 500. The communications services provider, which does business in and around Russia, issued an update on its debt position that calmed fears of an imminent liquidity squeeze.
So what
Management said in a press release that Veon has paid off over $400 million of debt that was due in early March. The company isn't in a dire financial pinch today, either, despite wild swings in the Russian ruble and a sharp economic contraction in a few key markets.
In fact, Veon has access to plenty of cash holdings that aren't denominated in rubles, management said. These resources "will allow us to maintain a prudent liquidity position in these times of macroeconomic uncertainty," CFO Serkan Okandan said.
Image source: Getty Images.
Now what
Veon's business is still likely to see huge impacts from the hostilities occurring in Ukraine, from the increasing level of sanctions being applied to Russia, and from changes in the value of the ruble. The company also earns much of its revenue from customers in Russia and Ukraine, and so sales will be harmed as those economies contract.
Today's debt and cash updates should ease investors' concerns that Veon will be caught in a liquidity crunch that threatens its entire business. But, while the company isn't in an emergency like that, it still faces some major challenges tied to the war. That's why investors should be extremely cautious when considering owning the stock.
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Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
