Shares in Rocket Internet plunged 14% within minutes of their stock market debut in Frankfurt on Thursday as investors gave Europe's largest internet listing since 2000 a cold welcome.
Global e-commerce investor Rocket had sold shares at the top of its price range and brought forward the debut by a week, citing exceptional investor demand.
The shares started trading at the offer price of 42.50 but fell to 36.66 euros after a few minutes. By 1005 GMT (11:05 a.m. BST), they were down 3.9% at 40.83 euros.
Analysts said investors have been concerned about the Berlin-based company's lack of profitability but had bought shares hoping to ride the tech listing wave which culminated in Alibaba's New York flotation.
"Many investors subscribed much more shares than they normally would have, hoping for a quick return. When some investors saw others getting out, they did the same," said an equity capital markets banker who declined to be named because he is not authorised to speak publicly.
The IPO raised 1.4 billion euros ($1.8 billion), excluding an over-allotment option. That is almost double the 750 million euros the company said it expected to raise when it announced its listing plans a month ago.
Rocket Internet has set up e-commerce sites and online marketplaces for everything from taxis to meal deliveries in more than 100 countries. The group's revenue, which it makes by charging consultancy fees to the companies it sets up, rose 43% to 47 million euros in the first half of 2014, while it made a net loss of 13.3 million as costs rose.
The Rocket management team went into a closed booth in the stock exchange immediately after ringing the initial public offering (IPO) bell, avoiding journalists' questions over the pricing of the debut.
Oliver Samwer - who founded Rocket in 2007 with his brothers Alexander and Marc - later played down the share fall, which came a day after investors gave online fashion retailer Zalando's IPO a lukewarm reception in Frankfurt.
"One should look at shares from a long-term perspective and not from just one day, a week or a month," he said.
Germany's blue chip index was down 0.2% by 1005 GMT (11:05 a.m. BST) while the technology-oriented TecDax was down 1.3%.
Union Investment fund manager Michael Muders said Rocket Internet had a different risk profile than DAX bluechips.
"If you want to invest in Rocket Internet you have to be convinced that the Samwers can establish an idea in the market faster than anyone else. And you have to believe in the growth of emerging markets," he said.
"A professional investor needs to decide it he can live with the risk and volatility," he added.
One of the IPO organisers said the share price fall was partly due to the lackluster debut of Zalando's shares, which were down about 7% on Thursday after closing at exactly the issue price on Wednesday.
"The poor performance of the Zalando shares in their debut clearly weighed on Rocket Internet," said the organizer, who asked not to be named.
Rocket Internet had initially offered its shares in a 35.50-42.50 euros price range. Berenberg, JP Morgan and Morgan Stanley were joint coordinators of the offer, while BofA Merrill Lynch, Citigroup and UBS were joint bookrunners.