Paytm Stock Fall: Writing Was On The Wall

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Early this week when we painted a not-so-promising picture of Paytm IPO, many criticized us, made a mockery, and a few gave us some weird advice – stay away from analysis. Today, after Paytm shares got listed it’s proven, once again, that the joke was on them!

Retail investors who were excited enough and have been keeping their fingers crossed in anticipation of similar gains as Zomato or Nykaa, were left shocked and disappointed. Within an hour of listing, Paytm shares tanked 20% resulting in millions of dollars going down the drain.

The highly anticipated shares of the fintech company Paytm debuted at the stock market on Thursday. The stock was listed at Rs 1,950 on the NSE which is a 9.9 discount when compared with its IPO price of Rs 2,150. On the BSE, Paytm shares started trading at Rs 1,955 per share, with a market capitalization exceeding one lakh crore during the initial trades. The price, however, fell to Rs 1,806 within minutes of listing. After an hour of listing it was clear that Paytm overestimated the price of its stocks tumbled down by 20% to Rs 1,637.

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For many, including Dazeinfo, this doesn’t come as surprise. Our team of analysts – after understanding the views of many fund managers and investment advisors on Paytm IPO – came out with multiple articles which were quite alarming. None of those advisors or fund managers we spoke to were convinced with the asking valuation of Paytm.

Last week we wrote how some of those were quite skeptical about the whole startup IPO scene itself, and believe that India is in a massive IPO bubble that would burst sooner or later.

After the lukewarm response received by Paytm IPO, it became clear that Vijay Shekhar Sharma, Co-founder & CEO – Paytm, didn’t play its cards in a wise manner.

Many analysts believe that the performance of Paytm in the stock market would have a far-reaching impact. Many IPO-bound startups would either delay their IPO debut plans or restructure their IPO size and stock price.

One of the biggest reasons behind the underwhelming response received by Paytm IPO and disappointing Paytm listing was the ‘absence of visibility to the road to profitability, especially for retail investors.

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Will Paytm share be able to bounce back in the next few days or it’s a long road ahead for Vijay Shekhar Sharma and team to make people recover the losses they incurred from participating in Paytm IPO, it’s now a new debate on the internet. Whatever be the case, one thing is clear – IPO is not a magic wound to book profit. End of the day it’s a stock market, you gain some days and you lose some days.

What are your views on the Paytm listing? Please let us know in the comment section below.

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