IPO

Japan’s P2P Flea Market Mercari Makes IPO Debut At $7.4B

Flea market app Mercari saw its shares rise 77 percent in its Tokyo stock market debut on Tuesday (June 19) as the rare Japanese unicorn looks towards expansion in the U.S.

According to Reuters, shares rose as high as 6,000 yen in early afternoon trade, valuing the company at as much as $7.4 billion. The IPO, the biggest in Japan this year, raised $1.2 billion through the sale of around a third of Mercari’s shares, with the majority bought by overseas investors.

The listing makes Mercari the most valuable firm on the Tokyo bourse’s Mothers market for startups, putting it ahead of games and social network company Mixi and robotics firm Cyberdyne.

Mercari’s mobile app offers up a peer-to-peer marketplace, where tangible goods change hands directly and where people buy everything, from flashy items such as designer clothes to items as mundane as toilet paper tubes. The app has been downloaded 71 million times — a popularity that presages widespread use.

The app is well known and growing in Japan, where wages are falling and inflation is on the rise. The direct sales model cuts out the middleman and also displaces the traditional retail model. In fact, Jun Shimada, who serves as a senior executive with fashion retailer Bay Crew’s Group, warned that Mercari could be an existential threat even larger than that posed by Amazon.

Yet Mercari is losing money in the United States, where its expansion plans are being led by former Facebook executive John Lagerling. Chief Executive and founder Shintaro Yamada said at a news conference that while the company is not providing a timeline for U.S. profitability, it is confident it will happen.

Mercari’s U.S. expansion brought the company to a net loss of 4.2 billion yen in the last financial year through June 2017, with an additional loss of 3.4 billion in the nine months to March.

The app launched in the U.K. last year, and Germany and France have been named as candidates for future expansion in a climate where Google rivals are gaining traction.

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