Rocket Internet shares slide on stock market debut

Shares in Rocket Internet plunged 14 per cent within minutes of their stock market debut in Frankfurt yesterday as investors gave Europe's largest internet listing since 2000 a cold welcome. Global e-commerce investor Rocket had sold shares at the top of its price range and brought forward the debut by a week, citing exceptional investor demand.

The shares started trading at the offer price of €42.50, giving the firm a market value of €6.7 billion but fell to €36.66 after a few minutes. They were down 11.32 per cent at €37.69 at the close of their debut session.

Analysts said investors had bought shares hoping to ride the tech listing euphoria which culminated in Alibaba’s bumper New York flotation but had been concerned about the Berlin-based company’s lack of profitability.

“When some investors saw others getting out, they did the same,” said an equity capital markets banker, who declined to be named because he is not authorised to speak publicly.

As Rocket is still loss-making, investors had a hard time arriving at their own fundamental valuation of the group using traditional methods, such as applying an earnings multiple.

The disappointing opening, which came a day after a lacklustre stock market debut by Europe's largest online fashion retailer Zalando in Frankfurt, could lead to more caution in upcoming listings.

“Investors planning to buy into upcoming German IPOs like TLG, Tele Columbus or Scout24 will now make sure to pay close attention to the fundamentals and will not allow themselves to get carried away again by the momentum of the events,” the banker said.

The Rocket offer raised €1.4 billion, excluding an over-allotment option. That is almost double the €750 million the company said it expected to raise when it announced its listing on September 10th.

Rocket Internet has set up e-commerce sites and online marketplaces in more than 100 countries. – (Reuters)