Shares in the German e-commerce focused venture capital firm Rocket Internet fell on its debut on the Frankfurt Stock Exchange on Thursday. Europe’s largest IPO since the turn of the century saw shares sliding by 14% within minutes of the start of trading.
Rocket, which brought forward the debut by one week, had sold its stocks at the upper end of its price range, saying investor demand was exceptionally high. This appears to have been a miscalculation.
Shares commenced trading at €42.50, but within minutes dropped to €36.66. By 11.05 local time they were at €40.83, or 3.9% down.
While lauding the concept behind Rocket Internet, investors commented that the company is not yet profitable.
Investors bought shares at the beginning of trading. However, as soon as they noticed that some were starting to sell, others followed suit hoping for a quick profit.
The Samwer brothers say Rocket’s long-term share price matters more than its debut performance.
IPO raised €1.4bn
Rocket raised €1.4 billion (excl. an over-allotment option), which is nearly twice as much as what the company had expected to raise when the IPO plan was announced in September.
Rocket Internet was founded in 2007 by Oliver, Alexander and Marc Samwer, three brothers.
It copies the business activities of successful e-commerce firms in advanced economies and reapplies them in emerging markets.
It is active in more than 100 countries and posted $1 billion in revenue last year.
Zalando, a large European online fashion and footwear retailer that Rocket helped set up had its debut yesterday, and also disappointed, casting doubt on Germany’s hope of becoming a major startup hub.
Zalando’s share price rose 12% in early trading and then slid back to its issue price of €21.50.
Rocket’s CEO and co-founder, Oliver Samwer, said he remains optimistic, despite the fall in share price.
Mr Samer said in an interview with broadcaster N-TV:
“Our company isn’t interested in the first price. We’re oriented for the long-term.”
Financial Times Video – Rocket Internet