This exploded Challenger rocket has permanently damaged the standing of Internet companies. Many German investors carry the industry after the dot-com crash of the early noughties to this day. She can’t use this fresh skin gout of dubiousness.
It is ironic that Samwer’s indirect contribution to German equity culture could be much larger and more positive: Today, Monday, two companies, Zalando and Hellofresh, are moving up to the new Dax 40, Germany’s Internet Campano a. D. owe a lot.
Samwer not only paid the Zalando founders the return flight from South America, which they could no longer afford after a failed establishment there. He also got her new project started, an online shoe store. Hellofresh is also an alumnus of Samwer’s Berlin start-up factory.
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However, Zalando and Hellofresh have long outgrown their former sponsors and should be treated as such by investors. They are not the new Rocket Internet, let alone the next Wirecards – but the booster that the sedate Dax nobility needs.
Like two Berlin hipsters at a debutante ball
And that’s precisely because they stand out in the Dax like two Berlin hipsters at a debutante ball. Their family tree does not go back to the 19th century like that of Siemens or BASF, not even to the 20th century. The newbies don’t pay dividends. The only currency they currently offer their investors is a rising share price. And they are founder-managed. This has not been possible at Siemens for a while now.
But they belong in this society of the upper forty: Although Amazon has been trying to conquer the fashion market for years, Zalando is holding its own impressively. Hellofresh even won the USA in its market for boxes of ready-to-cook food and drove its domestic competitor Blue Apron to the brink of ruin.
Both companies have proven that they are not a flash in the pan. Although they profited massively from the curfews of the Corona year, they continued to grow rapidly in the first half of 2021 with 40 (Zalando) and 80 percent (Hellofresh) respectively. Both are Ebitda-profitable, otherwise they would not even be allowed into the Dax.
As a result of the Wirecard scandal, Deutsche Börse has tightened the rules of who is allowed in Germany’s highest stock exchange league. If today’s rules had already applied in August 2020, Delivery Hero would not have been allowed to replace the Aschheim fraudulent facility because the food delivery platform was not making a profit. Today Delivery Hero’s market capitalization is in the middle of the Dax values - ahead of Deutsche Börse itself, by the way.
The comparison with Wirecard is unfair and harmful
It treats the newcomers like dubious start-ups that investors should touch with the tip of their fingers. A lack of real profits was Wirecard’s smallest problem. Zalando and Co., on the other hand, has not yet accused Zalando and Co. of imagined sales.
Throwing them into this pot is not only unfair but also harmful. For a platform company, losses are often not evidence of bad business, but of a course that prioritizes growth because it has to. Should today’s start-up unicorns like Celonis or Wefox slow down their investments one day in order to be allowed into the Dax?
If Snap ($ 118 billion market value) or Airbnb ($ 104 billion) were German companies, they would not be allowed in the Dax. Admittedly, they must not be listed in the S&P 500, which has a similar profitability hurdle. It is a legitimate objection that the top stock market segment in particular should offer stability that is expressed in reliable profits and dividends.
But what is stable today? The economy is experiencing far-reaching changes, from digitization to the impending climate catastrophe. Have Eon or Deutsche Bank offered stability over the past twenty years? Will BMW and BASF do it in the next twenty?
Nobel laureate Harry Markowitz called diversification the “only free lunch” the stock market has to offer – the only investment strategy that lowers risk without hurting returns. Adding a few impetuous Internet stars to the industry-heavy Dax nobility can only help.
More: More corporations, fewer women: The Dax expansion does not make the boardrooms more diverse