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28.07.18 09:04
Motley Fool
The stock of Rocket Internet (WKN: A12UKK) has seen an impressive rally in recent months. Those who achieved the lowest prices in the spring of 2017 have almost doubled the value of their capital to date.
The rise in badets as well as the large insider purchases of the founder and CEO Oliver Samwer were a balm to share long avoided. The fault for the bad times was also the increased flutter. However, as this only stagnates or even decreases, another rally should have extra fuel.
The Kinnevik Rose War explodes the supply of stocks
The year 2017 was a bad year for action Rocket the long-time partner Kinnevik (WKN: A2AKKS) is separated from his wide participation. The Swedish investment company has been seen in direct competition with Rocket Internet and wanted to draw clear lines.
In early 2016, Kinnevik owned 13.2% of the Rocket Internet shares, in June 2017, when they were separated from all sides. The burden of this development has been borne by Rocket Internet in two ways. On the one hand, this has worsened the perception of Rocket Internet, because although Kinnevik has officially identified the conflicts of interest, many have speculated that they find the commercial development of Rocket Internet unsatisfactory.
On the other hand, the dissolution of a large stock causes a flood leading to a course of action in free fall, unless the demand increases at the same time. A look at the numbers shows how extreme the situation was. In the annual report published in April 2016, Rocket Internet had a float of 21.5%, from which the sale of Kinnevik increased by more than 60% the shares of the float.
Of course, any shareholder can, no matter whether or not he is an anchor investor, he will sell his shares at any time. In general, however, the main shareholders are significantly more long-term oriented. The higher the float, the higher the number of investors who sell their shares quickly bad news is high. This seems to have been internalized by Rocket Internet and has recently attempted to counter the rise in free float.
Buyback and Replenishment Oliver Samwer
When Rocket Internet released its annual report on April 14, 2016, a float of 21, 5%, the stock was no longer very far from the 30 euro mark. Then he rose with the float and with the stock price down. However, much has been done in the last six months to stem the rapid rise in free float.
At the end of March 2017, there were 165,140,790 outstanding shares of Rocket Internet. Of this number, 1,041,167 shares were purchased by a first share repurchase program between August 2017 and January of this year. Another stock repurchase program was then carried out in the spring in the form of an offer to buy back. Each shareholder was able to sell his shares at a discount to Rocket Internet within a limited time, but only up to a certain limit. The quota has not been exhausted, but at least 9,724,739 shares have been repurchased.
The main shareholder PLDT (WKN: A2AP71), a Philippine telecommunications company, sold nearly 7,724,739 million shares of shares launched on the market. Perhaps the bad memory of the turmoil after Kinnevik's breakup was so deep that they wanted to prevent such a situation from reappearing
Rocket Internet is not the only one to buy its own stock, but Oliver Samwer understood it well. In December 2017, as well as in recent weeks, he has purchased 4,150,000 Rocket Internet shares (the number is in volume and price). These are now with him with great certainty a long-term home. Perhaps he was not only motivated by the prospect of big profits, but he also wanted to curb the free float.
Together, about 15 million shares were purchased by Rocket Internet and Oliver Samwer, about the eleventh outstanding Shares in March 2017. Without these measures, they would likely have landed in the impatient floating and would have increased the volatility.
Now that the stock market bid has been curbed, a turnaround could also occur because no glut of supply will fundamentally lower prices. Floating development is an important factor in understanding the Rocket Internet stock.
Marlon Bonazzi holds shares in Rocket Internet. The Motley Fool does not own any of the mentioned actions.
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