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Japan’s FANG Trio Have No Teeth
12-06-2018, 06:01 PM.
Post: #1
Japan’s FANG Trio Have No Teeth
Japan’s FANG Trio Have No Teeth
Line, Yahoo Japan and Rakuten are out of favor for a reason.

By Shuli Ren
June 12, 2018, 5:00 AM GMT+8

With technology stocks in the U.S. hitting another record this month, Japan’s equivalent of the FANG group may appear too cheap to ignore. Don’t be so sure.

Shares of the three largest internet firms have pretty much collapsed. Portal operator Yahoo Japan Corp. and e-commerce company Rakuten Inc. have tumbled more than 25 percent this year, while instant-messaging service Line Corp. has lost about 11 percent.

Their performance is drawing bets that the worst is over. Eashwar Krishnan of Tybourne Capital Management sees a 125 percent upside for Line shares, citing the trajectory followed by Facebook Inc. and Tencent Holdings Ltd. Line hasn’t even started making money from its 170 million monthly active users yet, Krishnan said at the annual Sohn Hong Kong investment conference last month. The company earns 0.12 cents per user minute spent, versus Facebook’s 0.75 cents. 

Meanwhile, Rakuten is being seen as a potential takeover target. Walmart Inc. may be interested, following its $15 billion bid for India’s Flipkart Online Services Pvt., mused Amir Anvarzadeh of Asymmetric Advisors Ltd. E-commerce could be a rare growth area in Japan, given that it accounted for just 5.8 percent of retail transactions last year, versus 15 percent in China, according to Bloomberg Intelligence. 

The problem is that the trio are spending billions on a virtual land grab, giving away all their profits for perhaps not much of a future.

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