Paytm’s downfall on the Indian stock exchanges does not seem to be arresting, at least any time soon. The stock hit an all-time low today, hitting ₹476 after it slumped more than 10%. The slump has come in as a number of pre-IPO investors’s share sale lock-up period has ended, resulting in block deals on the market. To put things in perspective, Paytm IPOed last year at ₹2150, and has continued to erode investor wealth ever since. It is 77% down at current share price.
Last week, early investor Softbank had sold 4.5 per cent stake at ₹ 555 – ₹ 601 range, which was at a massive discount. Softbank is the troubled fintech company’s largest investor and its selling of shares in bulk has further eroded whatever investor confidence remained in the shares. Share analysts suggest that there is an excess supply of shares in the market is weighing heavy on Paytm. A large supply of shares is from investors from pre-IPO placements as well as non-promoter investors, analysts added.
According to SEBI rules, pre-IPO investors need to hold the shares post-listing for upto six months to one year from the IPO. This lock-in period expired on November 15.
Paytm’s valuation, which stood at some $16 Billion at its last private equity round, now stands less than $4 Billion ($3.8 Billion precisely) as per its current market capitalisation. It is expected to decimate even further, as non-profit making business models from startups aren’t attracting investor money, specially among turbulent global economic crisis times.
Vijay Shekhar Sharma, the founder of Paytm, assured investors last week that the firm is working “on the right path to profitability and free cash flows.” He added: “Our journey to build a scalable and profitable financial services business has just started.”
Interestingly, Sharma has said that the company is working to hit $1Bn in annual revenue this financial year ending March 23, still significantly small for a company that IPOed at nearly $15 Billion.
