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Flipkart witnesses another valuation markdown, Vanguard slashes share value by a third

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And yet another Flipkart investor strikes the company’s brand image with a valuation markdown. This follows in quick succession to the recent Morgan Stanley markdown, which valued the country’s first-ever unicorn at a mere $5.54 billion. Vanguard’s valuation is slightly better, valuing the company at close to $7.6 Billion.

Investment firm Vanguard’s funds has slashed the value of its holdings in Flipkart for the third time in the last one year. This markdown has been led by Vanguard Variable Insurance Funds, which invested in the startup during its Series G and H fund-raising rounds. It had then picked up a total of about 53, 619 shares in the homegrown e-commerce giant.

This information has been drilled out from documents filed by the fund with the U.S SEC. Taking a look at specifics, the investment fund has marked down the value of Flipkart shares by a massive 33 percent. This drives the value of these shares from $102.6 in June’16 to $68.7 per share for the quarter ended September’16. This further brings down the Indian e-commerce behemoth’s valuation down to $7.6 billion from the previous $11.4 billion at which it was valued by Vanguard.

Prior to this, the said investment fund had marked down its share value in Flipkart by 25 percent. The e-commerce giant had been marked up by Valic and Fidelity but that trend seems to have been replaced with massive cuts. And my massive I mean titanosaur-sized markdowns. This new valuation is, however, way more than that of Morgan Stanley – who is repeatedly pushing to tarnish the company’s image.

Commenting on the valuation markdowns, a Flipkart spokesperson says,

Mutual fund mark-to-market is a purely theoretical exercise and is not based on any real transactions. We are seeing a strong traction in our business momentum and operating performance. We continue to be focused on innovating for the customer, growing the market and executing on our long-term growth agenda.

Though Flipkart’s valuation has previously been marked down by numerous mutual funds and investment firms but the said cuts are troublesome for the former unicorn who is planning to raise fresh capital in the ongoing funding crunch. The enormity of these recent valuation cuts could cause a fatal dent in Flipkart’s corporate image and recognition – particularly when it has held talks with WalMart for a massive billion dollars investment in the venture.

It also comes on the heels of Flipkart reporting the highest losses among all other e-commerce behemoths operating in the country. The company’s losses stand at Rs. 2,306 crores, which is almost 110 percent increase in the current financial year. Also, certain reports suggest that Amazon India has overtaken Flipkart Internet in terms of total sales in the current quarter.

But the demonetization move from the government has helped the company stay afloat, with a definite decrease in sales. It’s competitors Amazon, Paytm and others have also been hit by the said move but they’ve managed to move ahead with the launch of innovative solutions like Wallet on Delivery service from Freecharge and Snapdeal.

A hands-on guy fascinated by new apps, technologies and enterprise products.

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