The valuation of Ola, the app-based ride-hailing startup unicorn, has been brutally slashed into half prior to its pivot into EV mobility market space!
A recent media report found that the U.S-based investment firm Vanguard Group, one of the first investors who backed the homegrown ride-hailing unicorn back in 2015, squeezed its investment value in Ola by a whopping 45% between December 31st 2019 and June 30th 2020. To make it even more unpleasant for the management of Ola, once again, it recently cut down another 9.5%, thus bringing down the overall valuation of Ola from $6.5 billion to a mere $3 billion only within a short span of 1 year.
Note here that Vanguard is a minority investor in the ride-hailing giant with less than 1% stake in Ola. And, this isn’t the first time they have chopped down the company’s valuation. In 2017, the U.S-based investment firm slashed Ola’s valuation by 41%. However, it later quickly marked it up in the subsequent months.
Now, the reason the homegrown transportation giant’s valuation received the axe is undoubted because of the global pandemic that plagued almost the entire 2020. Besides the hospitality industry, the mobility sector has been the second-worst impacted industry due to the COVID-19 pandemic.
Both Ola and Uber’s various offerings, such as airport transit, ride-sharing, daily commute, saw a harsh decline in the demand during the early months of the pandemic as strict lockdowns were imposed in most parts of the country, with schools and offices shut down indefinitely.
But, that being said, now as lockdowns have been lifted and social distancing norms are slowly on their way to being fazed out, the mobility sector is recovering slowly as well. According to a report by the market tracker RedSeer Consulting, in Januar 2021, India’s ride-hailing segment, including bikes, taxis, cabs and autos, observed 71 million trips worth $164 million. This translates into a 63% recovery in both the value and volume of rides from the pre-pandemic levels as back in January 2020. The sector observed 113 million rides worth $259 in gross booking value (GBV), before the country plunged into lockdown, the report mentioned.
As of now, the ongoing recovery is primarily being led by autos and bike taxis which recovered 83% and 62% respectively when compared to the pre-pandemic levels. Cabs, on the other hand, have only recovered 54%, compared to the same period.
All in all, Vanguard might soon reverse its latest move of reducing the value of its investment in Ola. Bhavish Aggarwal-led ride-hailing giant is currently seeking to pivot into the promising and growing market of low-cost electric vehicles, modelling it somewhat after Musk’s Tesla.
The company said that it plans to own the entire value chain for EVs, which includes everything from engineering to manufacturing and retailing electric vehicles. Ola will kick off its entry into the market with electric scooters, which it plans to unveil in the middle of 2021 itself. To achieve the milestone Ola is setting up the world’s largest scooter manufacturing planned, named “Future Factory”.
All said and done, it would be interesting to see how much impact and influence the latest move by Vanguard will have on other investors of Ola.
We will keep you updated on all future developments. Until then, stay tuned.