Paytm’s share price crashes 79% in a year, in the world’s worst post-IPO performance in a decade

The company terribly overvalued itself on market debut a year back, and its shares debuted on a discount.

FPJ Web DeskUpdated: Thursday, November 24, 2022, 05:24 PM IST
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Paytm CEO Vijay Shekhar Sharma | File image

Months after Indians were forced to line up outside ATMs, Paytm founder was seen dancing on stage over the success of his app, which offered an alternative to cash, which was in short supply. With the catchphrase ‘Paytm Karo’, the platform became for e-payments, what Colgate is to toothpaste and Cadbury is to chocolate in India, brands fused with the product’s local identity. But with the rise of PhonePe and GPay, the unicorn slipped to third position among India’s e-wallets, with a 15 per cent market share, and was overvalued for its IPO.

Making headlines for the wrong reasons

At Rs 18,300 crore Paytm was touted as India’s biggest IPO, but investors didn’t dance to its tunes, as the stocks debuted at a discount and crashed to hit its lower limit. The market value of Paytm was dragged down by more than $6 billion after its initial offering, showing that the enthusiastic founder Sharma had overestimated its worth. A year after the spectacular failure of Paytm’s market listing, the stock has plunged by 79 per cent, in the world’s worst post IPO performance for any firm in a decade.

Not the global acclaim they sought

Paytm’s founder may have compared to his firm’s struggle to that of Elon Musk’s Tesla, but almost matched the performance of Spain’s Bankia SA, which crashed 82 per cent in a year after its IPO. The investor confidence is fast eroding, as Softbank is reportedly planning to cut its stake in Paytm, and other foreign players are pulling out. Hopes about the company turning profitable are also low, causing further stress for Sharma.

The unicorn that was a bad bet

Along with Zomato’s failed IPO, Paytm’s debut debacle has also become a cautionary tale for the Indian startup ecosystem, prompting Oyo, Ola and others to push off bids to go public. Apart from the trouble among the new age tech startups, the possible debut of a payment app backed by a major Indian conglomerate, has also raised concerns about Paytm’s future.

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