An employee browses the Mercari Inc. website on an Apple Inc. iPhone in an arranged photograph taken at the company’s office in Tokyo, Japan. (Photographer: Tomohiro Ohsumi/Bloomberg)

Mercari Jumps 77% in Tokyo Debut After $1.2 Billion IPO

(Bloomberg) -- Mercari Inc. soared on its first day of trading on the Tokyo Stock Exchange, underscoring investor optimism in its prospects.

Shares of the Japanese online marketplace traded at around 5,300 yen as of 11:25 a.m. in Tokyo on Tuesday, rallying from the 3,000 yen price at the initial public offering on June 11.

Mercari Jumps 77% in Tokyo Debut After $1.2 Billion IPO

Mercari raised 130.5 billion yen ($1.2 billion), Japan’s biggest for a technology company since Line Corp. debuted in July 2016. The flea market app has become the country’s default market for selling and buying used goods on smartphones, where downloads of the app reached 71 million in the five years since its debut. As the immediate excitement of the IPO settles, investors will be keen to see if founder Shintaro Yamada can execute an ambitious overseas expansion plan, something that no other Japanese tech startup has yet managed to do.

“Mercari has a pretty unassailable position in Japan,” said James Riney, the head of 500 Startups in Japan. “The biggest challenge will be whether public investors will have the patience for Yamanda-san and his management team to focus on the U.S. market.”

Mercari sold 43.5 million shares in the IPO, including additional stock via a greenshoe allotment. Investors in the U.S. and Europe bought 7.9 million of existing stock and 16 million of new shares.

People sell everything from clothes and electronics to baseball tickets using the app, which has been downloaded more than 100 million times globally. Mercari said revenue in the nine months through March almost doubled from a year earlier, to 24.6 billion yen. The company reported operating losses of 1.9 billion yen during the period, as it sought to expand in the U.S. The Japanese operation has been profitable for the past two years.

The Tokyo-based company debuted in the U.S. in 2014, joining a long list of well-funded marketplace startups —including OfferUp, Letgo, Wish and Poshmark— seeking to lure users away from established online markets such as EBay Inc., Inc. and Craigslist Inc.
U.S. downloads of Mercari’s app reached 37 million by the end of March, about half the total in Japan.

Its U.S. operations are generating 6 billion yen worth of gross merchandise volume, a key metric of the value of goods sold on the marketplace, compared with 93 billion yen at home. The company doesn’t break out monthly active user numbers by country.

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