India’s startup poster boy Flipkart, continues to face waves of pessimism from its early investors. While Morgan Stanley had earlier marked down its stake in Flipkart by 25% — bringing the rather bloated valuation down to $11 Billion — its T Rowe this time, one of Flipkart’s investors from 2014, which is marking down its stake in India’s biggest ecommerce company, by 15%.
The markdown — taking the $15 Billion valuation from Flipkart’s July 2015 funding into consideration — will bring down the current valuation to $13 Billion. And while that may not be as drastic a fall as Morgan Stanley’s, it is rather a proof of the fact, that investors have started to find out flaws in India’s largest ecommerce player’s (by GMV) business model and are intensely questioning company’s profitability.
T Rowe marked the value of its Flipkart shares at $120.69 per unit, according to its filings made for March quarter (via ET), as compared to the value of $142.26 assigned to them at the end of December 2015.
Interestingly, if you combine both of Morgan Stanley’s markdown with that of T Rowe’s current one, Flipkart’s valuation comes falling down below the $10 Billion mark ($9.6 Billion to be precise).
However, T Rowe’s markdown — similar to Morgan Stanley’s — isn’t just limited to Flipkart. This is rather a part of a global trend of sorts, wherein the investment firm has marked down its stake in some of the most valuable and better doing companies across the globe. These include the likes of AirBnB and the over $70 Billion valued Uber.
T Rowe or Morgan Stanley however, aren’t the only ones bringing down their bars on Flipkart. Some of the company’s earlier investors have also sold off their stakes in signs of under-confidence in investor sentiment. IDG for example, which was an early investor in Flipkart, recently sold off its remaining 0.9% stake after selling close to 1% last year. The firm has reportedly taken a complete exit from the company. Accel Partners too, had reportedly sold off $100 Million worth of stake to Qatar Investment Authority, though it was denied by Flipkart later.
Reports have also suggested, that Flipkart even approached Snapdeal and Paytm’s common backer — the mighty Alibaba — which refused to drop in fresh capital at the current valuations. The company has also reportedly approached some of Snapdeal’s other backers like Ontario pension fund and others, but had to take a no from each one of them.
The company’s woes aren’t limited to just financial numbers though. The company is currently dealing with a more important crisis internally, as most of its experienced senior management team at key positions have resigned one after the other. While ex-Googler Punit Soni — brought back to India from Silicon Valley to head Flipkart’s products division — was the most recent exit, other resignations like that of Myntra founder Mukesh Bansal, Ankit Nagori etc. have played a massive role in creating a negative sentiment around the company.
We’ve mailed Flipkart for a comment and will update this story once we receive an update.
Founder of the The Tech Portal. Now a consulting editor for the platform. Has advised and worked with numerous early/mid-stage startups during past 5 years in various roles. You can click on his LinkedIn profile and drop in a message to get in touch.