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Shares of Rakuten Exploded, Extending Their Gains

Tech giant Rakuten once more demonstrated its strength on Monday. Interestingly, shares of the Japanese tech giant jumped 20% on Monday, extending their gains after the company’s announcement. According to the announcement, the company plans to raise $2.2 billion in order to better compete with its U.S. rivals.

 

It is worth noting that, Rakuten will sell an 8.3% stake to postal and baking giant Japan Post. As a result, Japan Post will be the largest shareholder outside of the founding Mikitani family. Moreover, the Chinese internet company Tencent will take a 3.6% stake. Also, U.S. retailer Walmart will buy a 0.9% stake.

 

People should keep in mind that, the tech giant has over 70 businesses ranging from e-commerce, mobile network, video streaming, and financial technology. Interestingly, it has a market capitalization of around 1.79 trillion Japanese yen ($16.4 billion).

 

Rakuten and plans for the future

Rakuten is growing very fast and even at this size, the company needs more capital for growth. It is worth mentioning that, Rakuten and Japan Post are jointly developing capabilities in artificial intelligence to make deliveries, especially in rural areas more efficient. This is not the end of the story, as two companies also collaborate on fintech.

 

Interestingly, the tie-up with another tech giant Tencent marks another attempt by Rakuten to penetrate the Chinese market. As a reminder, the Japanese tech giant had a failed partnership with Chinese internet giant Baidu in the past.

 

Thanks to a partnership with Tencent, the company has a channel to export Japanese products to the Chinese market.

 

The Japanese tech giant’s revenue in 2020 stood at 1.46 trillion yen ($13.35 billion). This result represents an increase of 15.2% from a year ago. However, it incurred an operating loss of 93.85 billion yen ($860.57 million) in 2020, reversing the operating profit of 72.75 billion yen a year ago.

 

It is not surprising that Rakuten wants to export its products to China. This way it will be easier to generate more income in the future.



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