Greenwood Trading: Stock in Rocket Internet, the German e-commerce incubator and seed capital business lost as much as 12% on its IPO’s launch.
Greenwood Trading: Rocket Internet, the Berlin-based e-commerce seed capitalist and start up incubator business proved last week that timing remains a critical element in any IPO; even those in sectors where investor appetite is buoyant.
The firm, which launches e-commerce companies, that base their business models on already-successful formulae before taking them public received a bumpy ride on the Frankfurt stock exchange as its stock plunged by 12%. The IPO is the largest in Germany since 2007 and comes a day after one of its latest successes, Zalando, Europe’s largest online fashion retailer went public and saw its stock surge by as much as 14% in its first trading session.
Paul Iurio, a Greenwood Trading technology analyst said, “This had very little to do with Rocket Internet and everything to do with a sympathy selloff in European markets after a 200-plus point plunge in the Dow Jones Industrial Average the preceding trading session. Investors are still hungry for these IPOs so we expect a strong rally in the next session or two.”
Certainly, interest in Rocket Internet’s IPO was in no doubt as the company announced that its issue was substantially over-subscribed even when priced at the top of its estimated range at €42.50 per share. The IPO raised $2 billion for the firm that modelled Zalando on US online retailer, Zappos.com.
“The technology IPOs are set to continue with quite a few Chinese innovators set to follow on tech leviathan Alibaba’s coat-tails but there are some signs that investors could be running short on patience with high-priced deals. The window for raising money for social media or e-commerce ventures could be narrowing,” added head of research at Greenwood Trading, Simeon Kwanda.
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