The Opaqueness of Rocket Internet

Rocket Internet

Quartz asks “How much is Germany’s glorified $5 billion startup factory really worth?”:

Rocket’s holding structure features shareholdings in more than 500 far-flung companies, and its model of breakneck growth means that investors can’t rely on the standard, stable financial measures they normally use to judge a company’s value. Indeed, the numbers that investors care most about aren’t reported in Rocket’s official financial statements. Instead, they look to self-reported, unaudited estimates of Rocket’s “last portfolio value” (LPV), or the theoretical value of the stakes it holds in portfolio companies. (…)

“In the main, [Rocket’s] communication focuses on all things LPV,” wrote analysts from Jefferies in a recent note. “Disclosure is certainly not comprehensive and, one has to say, there is a promotional tone running through the prints, for sure.”

It is really hard to pin down Rocket Internet because of this.

I keep relying on my thesis regarding their strategy for a general direction:

I don’t believe this will work well in direct competition with bigger companies like Amazon, Zalando, Alibaba or Uber. Because here’s the thing: A global online retailer can exert network effects in more dimensions than locally confined companies can. (besides plain scale effects which also come to fruition here) (..)

The amount of market influence [global online retailers] will exert a few years down the road can hardly be overstated.

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3 comments

  1. […] The Opaqueness of Rocket Internet […]

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  2. […] and access to capital. This may have looked all good and fine on paper but it doesn’t seem to be working too […]

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