Have you ever noticed what’s written on the tiny sponsor patch on Steph Curry’s jersey?
This week, NBA fans are hyped for the Warriors-Lakers playoff series, where Steph Curry will match up against LeBron James.
For supporters of the defending champion, do you think you could invest in the team another way? Perhaps you can buy Rakuten, one of the principal sponsors of Golden State Warriors.
Rakuten is an e-commerce platform in Japan. Like the Warriors, Rakuten has ways to recruit loyal fans. Its loyalty program, Rakuten Super Points is one of them, which encourages a cross-use of services in its ecosystem. Users get extra points shopping with its credit card or investing with its stock brokerage, for example. With these, Rakuten defends a strong network effect, which earns the company a narrow economic moat rating.
Winning every game is the goal, but for a basketball team or an e-commerce company, having weaknesses is inevitable. While Rakuten is strong in the e-commerce arena, its mobile business is losing points. The unprofitable segment dragged Rakuten to a massive operating loss in the previous fiscal year. For Rakuten to acquire a meaningful number of paid mobile users, our director of equity research, Kazunori Ito expects it to be long game.
If you want to invest in Golden State Warriors via Rakuten, wait for a dip before you buy. Shares in Rakuten is currently fairly valued.
For Morningstar, I am Kate Lin.
Bulls Say
- Rakuten’s domestic e-commerce marketplace, Rakuten Ichiba, will defend its leading position.
- Rakuten’s advertising revenue will be boosted by better algorithms for target marketing and new advertisement inventory.
- Rakuten’s fintech business will see continuous margin expansion from operating leverage.
Bears Say
- Amazon Japan and other local e-commerce players continue to compete aggressively.
- Rakuten needs to write off more goodwill for its overseas investment.
- Rakuten Card and its mobile payment will see challenges from newcomers, such as Yahoo Card and Line Card.
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