Ecommerce delivery in Nigeria 2013. Source: Pius Utomi Ekpei — AFP/Getty Images

Ecommerce delivery in Nigeria 2013. Source: Pius Utomi Ekpei — AFP/Getty Images

Excerpts from Fortune.com

Rocket Internet is falling behind its emerging market targets and investors are beginning to doubt its ambitious goal to be the Amazon outside of America. Rocket now has a market capitalization of $3.3 billion, well below the $5.89 billion valuation it put on its portfolio at April 30, and only just above the $3.1 billion in cash held by Rocket and its operating companies as of March 31.  Its African fashion retailer, Jumia, made a loss of $18.8 million in the first three months of 2016 on sales that fell more than a third. The devaluation of Nigeria’s naira last week is a new blow for Jumia.

Its slowdown is the consequence of Rocket’s shift to rein in spending on marketing and logistics as it seeks to stem losses, which it said peaked at $1.1 billion in 2015.

The stock has been on a downward trajectory since peaking in February 2015 after it surprised investors with a new capital hike and shifted strategy to invest in the food-delivery business in developed markets.

The latest share price tumble started in April when Sweden’s Kinnevik, Rocket’s second-biggest shareholder after the Samwer brothers, slashed the valuation for its emerging market fashion websites by two-thirds.

Neil Campling, head of technology research at Northern Trust Securities, who rates the stock a “sell,” doubts the Rocket businesses can replicate Amazon’s success because its markets are so underdeveloped and the cost of logistics so much higher.

“As soon as they reduce marketing, you see revenue growth decline substantially,” he said. “They haven’t got the scale.”

Oliver Samwer says Rocket has more than enough capital to fund its main startups until they turn profitable.

Read the full Fortune article here, published on June 29.