Free Phone Plans Pump Rakuten’s Stock… But December 26 Could Put an End to The Party

Rakuten Group Inc. shares are up 7.6% this morning after the company decided to play Santa Claus early, offering shareholders a one-year free mobile plan. (Because who needs dividends when you can get a free phone plan, right?) 

This jump was Rakuten’s biggest in three months, taking its total gains to 38% since Japanese equities took a swan dive in early August. That drop, sparked by the U.S. economy doing its best impression of a dying houseplant (one root in the grave, the other slipping on a banana peel), wasn’t helped by Warren Buffett panic-selling Apple like it was going out of style.

(Source: CNN)

Let’s talk about how Rakuten keeps the lights on. A lot of people think that the company is an e-commerce platform or a mobile carrier… but it’s really an ecosystem. Imagine Amazon, T-Mobile, and your neighborhood bank got together and said, “Let’s build a megacorp that traps customers in a never-ending cycle of loyalty points and cashback rewards.” (It’s like a corporate MLM, but with slightly less cringe.)

Here’s how it works: Rakuten reels you in with one service, like a mobile plan, and then slyly nudges you toward its other offerings… e-commerce, travel bookings, credit cards, and more. Every mobile customer is a potential super-user in their ecosystem. (Think of it like those free samples at Costco… they’re not there for charity, they’re bait.)

Oh, and Rakuten isn’t shy about affiliate marketing. When you shop through their platform, partner retailers pay Rakuten a cut. Rakuten then tosses some of that back to you as cashback rewards. It’s essentially a "you scratch our back, we’ll scratch yours" setup.

And if that’s not enough, Rakuten also has a fintech arm offering credit cards, insurance, and banking services. Their ultimate goal? To keep you spending and saving under one big Rakuten-branded roof. (Basically, they’re the Hotel California of your finances… you can check out anytime, but your money can never leave.)

In my opinion, Rakuten’s new shareholder perk is genius. The free mobile plan is estimated to be worth about 28% of the cost of 100 Rakuten shares at Friday’s closing price. (That’s like buying a car and getting free gas for a year, except the car is a stock and the gas is your phone bill.) Analyst Travis Lundy sees this as a clever move to lure in family investors, but there’s a catch… shareholders only need to hold the stock through December 26 to qualify. (If I were you I wouldn’t be buying on that day).

Rakuten has been clawing its way back from some rough patches. Its mobile segment, once a financial black hole, is finally starting to narrow losses. The company recently hit 8.12 million mobile subscribers… proof that its strategy of hooking users on one service and dragging them into others might actually be working.

But let’s not be too optimistic: Rakuten is still losing money. The bleeding has slowed, sure, but last quarter’s net loss was worse than expected. Analysts are split: five say buy, nine say hold, and one poor soul says sell. (That last analyst probably got a fruit basket from Rakuten’s PR team.)

Offering perks to shareholders isn’t a new trick in Japan. Tokyo Metro recently offered free train tickets to drum up excitement for its IPO. But Rakuten’s move takes things up a notch… it’s covering mobile bills. The clock is ticking, though. The free mobile perk ends on December 26, and the real challenge lies in what comes after.

My bet? Come December 27, Rakuten’s stock might feel like the party’s over and someone forgot to call the Uber.

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