Stock Analysis & Valuation Rocket Internet SE (RKET.SW)

• Previous Close: CHF25.70
• Sector Valuation Confidence Level: High

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	2745.00	10581
Intrinsic value (DCF)	6.31	-75
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Rocket Internet SE is a Berlin-based venture capital and private equity firm specializing in incubating and investing in high-growth internet and technology companies. Founded in 2007, Rocket Internet focuses on early-stage to late-stage investments, particularly in e-commerce, fintech, food delivery, fashion, and travel sectors. The firm operates globally, with a strong presence in emerging markets across Europe, Africa, the Middle East, Asia-Pacific, and Latin America. Known for its 'company builder' model, Rocket Internet identifies scalable online business models, rapidly develops them, and provides operational support to drive growth. The firm has incubated several successful ventures, including Zalando, Delivery Hero, and HelloFresh, demonstrating its ability to spot and scale digital trends. As a key player in the venture capital space, Rocket Internet leverages its deep industry expertise, global network, and hands-on approach to create value in the fast-evolving digital economy.

Investment Summary

Rocket Internet SE presents a unique investment proposition as a publicly traded venture capital firm with a proven track record of incubating successful internet companies. The firm's focus on high-growth sectors like e-commerce and fintech, combined with its emerging market exposure, offers potential upside. However, the lack of revenue and net income reported in 2022 suggests investors are essentially betting on the firm's ability to identify and nurture future winners. The low beta of 0.198 indicates relatively low volatility compared to the market, which may appeal to risk-averse investors. Key risks include the inherent uncertainty of startup investments, potential valuation markdowns in its portfolio, and dependence on exit opportunities. The investment case hinges on Rocket Internet's continued ability to replicate its past successes in new ventures.

Competitive Analysis

Rocket Internet occupies a unique position in the venture capital landscape as a publicly traded company builder with a specialized focus on cloning and scaling proven internet business models in new markets. Its competitive advantage lies in its operational expertise, global infrastructure, and rapid execution capabilities - allowing it to quickly launch and scale multiple ventures simultaneously. Unlike traditional VC firms, Rocket takes a hands-on approach, providing not just capital but also operational support, technology platforms, and management talent to its portfolio companies. This model has proven particularly effective in emerging markets where Rocket often enters before local competitors emerge. However, the firm faces increasing competition from both traditional venture capital firms and corporate venture arms that are becoming more operationally involved with their investments. Rocket's success depends on maintaining its first-mover advantage in new markets and its ability to continuously identify replicable business models before competitors. The firm's extensive network across multiple continents gives it an edge in sourcing local talent and partnerships, though this advantage may diminish as digital ecosystems mature globally.

Major Competitors

• SoftBank Group Corp. (SOFTBANK.T): SoftBank's Vision Fund is a major competitor in large-scale tech investing, with significantly greater financial resources than Rocket Internet. While SoftBank focuses on later-stage, high-profile deals (often in more developed markets), Rocket specializes in early-stage, operational company building, particularly in emerging markets. SoftBank's strength is its massive capital base, but it has faced criticism for overpaying for assets, whereas Rocket maintains tighter cost control.
• Prosus NV (NA): Prosus, a global consumer internet group, competes with Rocket Internet in emerging market investments, particularly in food delivery and classifieds. Prosus has deeper pockets and more established positions in markets like India and Brazil through companies like Swiggy and OLX. However, Rocket's operational focus and faster scaling model give it an edge in launching new ventures quickly. Prosus tends to invest in more mature startups compared to Rocket's company-building approach.
• Y Combinator (NA): Y Combinator is a leading startup accelerator that competes with Rocket Internet in early-stage company creation. While Y Combinator has a stronger brand and network in Silicon Valley, Rocket has superior operational capabilities and focus on specific business models. Y Combinator's strength is its broad, diverse portfolio and strong alumni network, whereas Rocket excels at focused, rapid scaling of particular e-commerce models.
• Global Founders Capital (NA): The venture arm of Rocket Internet's founders, GFC shares similar DNA but operates as a traditional VC fund rather than a company builder. GFC has more flexibility in investment choices but lacks Rocket's operational infrastructure. Both focus on global opportunities, with Rocket having stronger execution capabilities while GFC can make more diverse bets.
• Kinnevik AB (NA): This Swedish investment firm has overlapping interests with Rocket in digital consumer businesses, particularly in Europe. Kinnevik has been a co-investor with Rocket in several ventures. While Kinnevik has a longer track record and more patient capital, Rocket's operational focus allows for faster scaling. Kinnevik tends to take more conservative positions compared to Rocket's aggressive market entry strategy.