Rakuten Group (TSE:4755) Sells New Bonds, Is The 28% Undervaluation Enough?

Rakuten Group’s new bond sales put balance sheet moves in focus

Rakuten Group (TSE:4755) has outlined two senior fixed income offerings totaling ¥400 billion, both carrying a 4.370% coupon and maturing in April 2032, drawing fresh attention to its long term funding mix.

Recent trading shows how mixed sentiment around Rakuten Group has become. The 1-day share price return of 5.4% contrasts with a 30-day share price decline of 9.85% and a year-to-date share price drop of 35.83%. At the same time, the 3-year total shareholder return of 12.05% sits against a 5-year total shareholder return that is down 47.6%, suggesting short-term pressure as the market reassesses risk and potential in light of the new bond issuance and earlier efforts to fund its mobile and fintech operations.

Compare Rakuten Group’s refinancing moves with other companies reshaping their capital structures by scanning our curated list of solid balance sheet and fundamentals (21 results) for potential alternatives in the same funding conversation.

Fresh long term debt now sits alongside a falling share price and a published discount to analyst targets. Does that mix still leave enough upside in Rakuten Group for the extra balance sheet risk you might be taking on?

Most Popular Narrative: 28% Undervalued

Against Rakuten Group’s last close of ¥644.3, the most followed narrative points to a fair value of ¥895.4. This puts recent bond-funded balance sheet moves against a valuation gap that some investors are watching closely.

Rakuten Mobile is achieving rapid growth in subscribers, expected to drive the growth of the entire Rakuten ecosystem, contributing significantly to future revenue increases through cross-selling of Rakuten services to mobile users.

The adoption of advanced telecommunication technologies and strategic partnerships are set to improve Rakuten Mobile's network quality, expected to increase subscriber ARPU (Average Revenue Per User) and drive future revenue growth.

See why 5 investors see Rakuten Group as 28% undervalued.

Result: Fair Value of ¥895.4 (UNDERVALUED)

Still, the narrative around Rakuten Group can shift quickly if mobile profitability lags expectations or if refinancing and asset sales further strain financial flexibility.

Find out about the key risks to this Rakuten Group narrative.

Next Steps

Mixed signals around Rakuten Group can feel confusing, so move fast, look through the underlying metrics, and weigh both the potential upside and the financing concerns using the 4 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Rakuten Group?

If Rakuten Group has sharpened your focus on risk, return, and balance sheet strength, do not stop here. Broader idea hunting can help you build a more resilient portfolio mix.

• Target resilience by scanning companies with sturdier finances and cleaner leverage profiles through the list of solid balance sheet and fundamentals (21 results).
• Hunt for mispriced opportunities by reviewing the 14 high quality undervalued stocks that pair quality fundamentals with what could be discounted market expectations.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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