Thursday, October 13, 2016

Rocket Internet May Have A Proven Winner (RKET)

The headline is a bit of snark based on the company's offering document:

"Our proven winners generated aggregated net losses of €442 million" ($568 million)
-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

The company floated at 42.50 euros on October 1, 2014, €19.53, last.

Here's someone not named Samwer not being cruel to RKET.
From Bloomberg Gadfly:

Rocket Internet Leaves Us Groping in the Dark
Writing about Rocket Internet sometimes feels like assembling a puzzle in the dark. Investors deciding whether to back the German start-up incubator will wish they could find the light switch too.

A French tech publication called le Journal du Net seemed to have found a missing piece of the jigsaw last week. It published a story that included slides of undisclosed and bullish financial projections for HelloFresh, a meal kit start-up backed by Rocket Internet that competes with Blue Apron in the U.S. The slides appeared to show it would more than double revenue this year, turn profitable on an adjusted Ebitda basis next year, and hit a 15 percent margin on the same basis in 2018.

Freshen Up
Rocket Internet's Hello Fresh is growing sales rapidly, while Ebitda losses have narrowed.
Berenberg analyst Sarah Simon then published a note on Tuesday that analyzed those leaked figures and concluded they implied a Hello Fresh valuation higher than the 2.6 billion euros ($2.9 billion) disclosed by Rocket in September. This matters because HelloFresh is the second-biggest holding in Rocket's portfolio and could be a candidate for an IPO in the next year or so. Understanding its health -- along with that of take-out service Delivery Hero, in which Rocket owns a 37 percent stake -- is central to any calculation of Rocket's valuation.

With the already profitable Blue Apron preparing an IPO that may be valued at about $3 billion, the added detail should be good news for Rocket's big bet on food tech. The meal-in-a-box business model is still new, and who knows how it'll fare as people's eating habits change. Already someone who doesn't feel like cooking after work has a dizzying array of options from takeout delivery apps such as Just Eat, GrubHub and UberEats.

Yet the leaked numbers were pretty positive, yes? Especially for Rocket, whose shares have languished because people really can't get a handle on what its assets are worth.
Well, not quite. A HelloFresh spokeswoman told me that the slides published by the French website were incorrect and did not correspond to the start-up's business plan. When I asked Rocket for comment, they refused to say anything about the financial projections or anything else about HelloFresh.


Rocket is the majority owner of HelloFresh with a 56 percent stake; it knows if those slides are right. The numbers are in the market, and a respected bank has issued a note republishing them in whole. Meanwhile, Rocket's shares climbed as much as 4 percent in the hours after the note came out even as European markets traded lower, showing that at least some investors thought the information was credible....MORE
Okay, a tad brutal.
Me, I get downright sadistic about these types of deals