India’s top e-commerce platform, Flipkart faces yet another valuation markdown by Fidelity Investments, an American financial services corporation. This adds to the series of markdowns faced by the online platform from known investment banks including the T Rowe Price, Valic, and Morgan Stanley.
Degrading the corporate image of Flipkart further, Fidelity valued the company at just $5.56 billion. Moreover, it pegged down the value of its shares by 36.1 percent, bringing it down to $52.13 per share as of November 2016. Whereas the shares were priced at $81.55 per share as of August 2016 by the fund.
The prior valuation by Morgan Stanley did some similar estimations. The fund bought down the valuation by 38.2 percent giving a massive blow to the e-commerce giant with evaluating the company at $5.54 billion. Though T Rowe pegged the valuation of its share at $93.15 for the quarter ended December with a mere 4% decrease.
The valuation cut comes on the heels of reshuffling going on the top level management. Recently, Ashish Agrawal and Hari Vasudev, senior VP of engineering have resigned from the company. It has recently also appointed Kalyan Krishnamurthy, a former executive at Flipkart’s largest investor Tiger Global to head the organization as CEO. Though Flipkart has refused to comment on the issue, the company previously released a statement saying,
Markdowns are a theoretical exercise and valuation will be determined when it raises a new round of funding.
It seems as if the company does not bother much about the said valuations and degradations as the company is far away from diversification of its product range. The rival platform Amazon still stands at a better position witnessing its growth post launch of video streaming, AWS, Launchpad etc.
Moreover, the company lingers on Walmart for a massive $1 billion investment in the venture, though there have been no updates on it as well. The last fund raise of the company took place about 2 years ago with an investment of $15 billion.
Fidelity presently holds 52,096 shares in Flipkart. This is the steepest mark down mutual funds giant which invested in Flipkart in the Series D round. The company filed the regulatory documents with the US Securities and Exchange Commission, lowering down the valuation of its holdings in Flipkart by over a third.
The homegrown e-retailer faces extensive pressure from competitive ventures and is in utter need of funds; Though there is still some hope left for Flipkart regards to placing a foot in other trending business ventures. Almost six mutual fund investors have now marked down Flipkart in the range of $5.5 billion to $10 billion.