Rakuten Shares Drops 9% on Report of Possible $2.2B Public Offering

Rakuten shares gained approximately 7.9 percent YTD despite dropping about 20 percent last year.

Shares of Rakuten Group Inc (Tokyo: 4745) closed Monday trading at ¥643, down 9.05 percent from the day’s opening price. The sudden drop in Rakuten shares was attributed to the announcement by Reuters that the company is in the final stages of issuing new shares in a bid to raise approximately $2.2 billion. According to the media outlet, Rakuten plans to issue shares to founder and CEO Hiroshi Mikitani and a fund controlled by the entrepreneur.

However, the company issued a press statement discrediting the announcement. According to Rakuten, although the company is planning to raise capital, there has been no official announcement to warrant the rumors.

“While the Company has been considering various financial strategies including what has been reported in the news reports, no decisions have been made at this time. If a decision is reached on a matter that requires disclosure, we will do so in a timely and appropriate fashion,” the company noted in a press release.

Reportedly, people familiar with the matter confirmed that the company intends to pay down debt and build base stations for its mobile business with the $2.2 billion.

Rakuten’s recent funding report comes after KKR, a leading global investment firm, increased its stake at Seiyu from 65% to 85 percent.

Hiro Hirano, Co-Head of Private Equity for KKR Asia Pacific and CEO of KKR Japan, said:

“We are pleased to deepen our relationship with Seiyu, an iconic Japanese brand in which we continue to see strong promise. We look forward to unlocking the company’s full potential through the continued strategic partnership with Rakuten and Walmart…”

Rakuten Market Outlook

The Japanese tech conglomerate announced its first-quarter financial results on May 12. According to the announcement, the Rakuten Group recorded revenue of ¥475,635 million, up 9.3 percent year-on-year, during the first three months of the year that ended on March 31, 2023. During the first quarter, the company issued approximately 2 million common shares, thus diluting its stock market. Currently, Rakuten has about 1.59 billion in shares outstanding.

Nevertheless, the latest stock data shows Rakuten shares gained approximately 7.9 percent YTD despite dropping about 20 percent last year. Having been rated 16 times, Rakuten shares received an average rating of Hold, according to a survey conducted by MarketWatch.

The company has, however, worked toward diversifying its businesses and widening its market reach. Among its subsidiaries – including Internet Services, FinTech, and Mobile – the company significantly integrated them to ensure their future growth prospects.

Furthermore, a report from REFINITIV shows that Rakuten posted a net loss of about 735 billion yen in a little more than four years.

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