Rocket Internet: “We May Never Become Profitable in Our Target Markets”

Rocket Internet

Rocket Internet announced today that it has applied for admission of its shares to trading on the regulated market (Prime Standard) of the Frankfurt Stock Exchange. This uplisting was promised around a year ago.

Press release:

Since Rocket Internet’s IPO in October 2014, the Company’s shares were listed on the non-regulated market (Entry Standard) of the Frankfurt Stock Exchange. The Company changed its accounting standards to International Financial Reporting Standards (IFRS) last year, which is a key requirement for a Prime Standard listing.

As more information has to be provided by the company now, the accompanying prospectus (PDF) is 532 pages long.

Lots to explain.

For starters, here are a few risks the company had to name for its business:

  • “Our operations may be impaired and our growth may cease if we do not succeed in raising additional equity or in borrowing money on favorable terms.” (page 22)

  • “We may never become profitable in our target markets due to the
    substantial operating complexity we need to overcome, including
    the maintenance of significant logistics, delivery and payment
    infrastructure.” (page 23)

This one is especially peculiar:

  • “Rocket Internet SE was co-founded by Oliver Samwer, its current chief executive officer, and we continue to depend on his leadership. Conflicts of interest may arise between Mr. Samwer and us and there is no guarantee that Mr. Samwer will or will be able to continue to devote his time and energy to us.” (page 23)

This may be a hint to Oliver Samwer leaving in the not-so-far future, maybe within the next year or two. (As he is very good at raising money this could become a very serious problem for the holding.) And, one wonders, what might be potential conflicts of interest between a company and its CEO? Is he already planning to set up a new, competing fund for financing startups? Very odd.

One problem with assessing Rocket Internet has always been the company’s opaqueness. This is going to change now. We will see wether it will change to a large enough degree to finally get a better handle on the holding.

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