NEW DELHI: After falling over 11% on Monday, Zomato shares on Tuesday nose-dived another 12% to close at Rs 41.65/piece on the BSE. The two-day bloodbath has wiped out nearly Rs 9,000 crore of investors’ wealth and has brought down the food aggregator’s market capitalisation to 32,793 crores.
Zomato had emerged as one of the most valuable companies on listing day with a market cap of Rs 98,849 crore and its valuation soared to Rs 1,33,144 crore in November’21. The fall, which was triggered on Monday after the one-year lock-in period of its pre-IPO investors ended, weighed heavily on investors' sentiment on Tuesday as well. The fall was sharper as overall market sentiment, especially of tech stocks, remained weak ahead of the crucial FOMC meeting. Benchmark Sensex and Nifty declined a little less than 1% on Tuesday.
“Worries of Fed tightening are weighing on the profitless Internet names globally. The entire sector has been going through a period of re-adjustment as the focus is shifting from growth to cash flow. FANGMAN is down 15-65% a year today. This has also been impacting the global food delivery stocks which are down 50-65% YTD, with Zomato being the worst performing stock,” said brokerage Jefferies in its commentary on Monday. Since the beginning of 2022, Zomato's share prices have fallen by over 70%.
Besides Zomato, fintech major Paytm shed nearly 9% on Tuesday to skid below the Rs 700-level.
Jefferies sees a major upside in Zomato's share prices and has kept a price target of Rs 100. While Jefferies is bullish on the stock, few market experts feel the fall was bound to happen even as Zomato made a blockbuster debut in July last year. Ace investor Shankar Sharma on Twitter said, “It was game over on listing itself.” What also has impacted Zomato's share prices is its decision to acquire another loss-making startup Blinkit. This, according to many experts, will delay Zomato’s path to profitability.