Rocket Internet disappoints investors

Looking at Rocket Internet‘s 12 most important online sellers, their first quarter revenue grew 34 %, helping lower losses 23 %. Nevertheless, investors punished investment firm Rocket Internet, sending its share down 5 %.

Turnover grew, losses dropped

Rocket Internet invests in online start-ups that move proven business models into new, fast-growing markets, limiting its operations to a few areas: food, pharmacy, fashion, living and travel. Some of its investments include food box supplier HelloFresh, a Middle Eastern fashion company (Namshi) and department store Westwing.

The company’s investments managed to boost their turnover 34 in the first quarter, up to 532 million euro, improving their margins 0.16 %. That meant margins are now at – 0.22 %, although their overall cash drain dropped 23 % or more than 40 million euro. CEO Oliver Samwer expects numbers to keep improving over the course of 2016.

Investors are not as pleased

Nevertheless, investors were disappointed. Immediately after the numbers were published, investors reacted on the Frankfurt stock exchange, sending Rocket Internet’s share down 5 %. Analysts felt the 34 % turnover growth rather limited compared to last year’s 69 % turnover increase in the first quarter.

One of its core investments, HelloFresh, may have grown its turnover 211 % thanks to increased marketing efforts, but its losses also compounded, from 7.3 million euro to 27.3 million euro. Investors also felt the information provided was rather selective and limited in scope.

For instance, Lazada‘s results were not added in the financial results. Rocket Internet sold a majority of its shares in the Southeast Asian online sales platform to Alibaba in April 2016, while the Chinese also have the option to buy the remainder of its shares.