Stock Price almost one-third in these 5 years
Rakuten used to have its stock price of roungly JPY 2,500 in the early 2015 but it is JPY 778 as of today, March 2020. There are several reasons that caused this tragedy so let us pick up some interesting reasons here.
Huge Gap between own valuation and market’s valuation
There are many funny stroies around Rakuten all the time but this huge discrepancy of roughly $40 Billion between Rakuten’s own valuation and their market cap is well representing their problem.
It reminds me of the terrible fight between HD-DVD & Blue-ray which happened more than a decade ago. In the later phase of this war, HD-DVD team was calling out some tricky numbers like “bundling sales ratio” to conceal the defeated reality. Likewise, Rakuten is explaining their “growth” by calling out the increase of “membership value” according to their own definition. This membership value is indicated with gray color in the graph here while the dark-blue is true market cap. They are claiming that they calculated this membership value by refering to the growing cross-use ratio of thier multiple services.
Overview of the Competition Landscape
EC Competitors
The landscape of EC industry is getting more and more competitive. Not only Amazon and Yahoo, but also the shop builders like Shopify is now so easy-to-use that merchants are able to examine departure option more easily. Having own online shop is quite a challenge but it gives them full control over their own brand and of course no longer need to pay commission!
payment competitors
Rakuten has their own payment method that is named “R-pay” but that competition is indeed a red ocean. LINE and Softbank are now merged and getting more & more aggressive in user acquisition.
Rakuten launched their telecom network as an experiment and then ended up with huge outage in December 2019..
time to launch the recovery plan?
Ok! Then, how to increase this super-cheap stock price by getting more trust from the market? Their final attack plan is now with the launch of new MNO (Mobile network operator) in Japan! Mobile number subscription in Japan is way more expensive compared to Europe and actually other MNO is making significant profit. If Rakuten could get some sezeable market share, that would be a very great success!
Challenge for the world’s first “Cloud-native” Platform
Rakuten is claiming that they have plan to deploy world’s first “cloud-native” telecom platform that utilize the fully virtualized server instances. It indeed sounds like a big challenge.. and offering super cheap plan compared to the existing Japanese MNOs. (Rakuten offers JPY 2,800 per month with roughly 10GB data communication)
It sounds exciting enough and I believe everybody is paying close attention on it !
Rakuten is claiming the platform is “simple, agile, and disruptive”.. hope that word is true 🙂
Author: Rodorigo. J Tani
Digital Content Producer
Introducing the latest digital business trend from APAC countries. If you have any interest in running content marketing or influencer campaigns, please kindly reach out to me at rodorigo@orangefox.ai