In an Indian e-commerce ecosystem dominated by Amazon and Flipkart, Snapdeal was on the verge of collapse by 2017, with losses surging past Rs 5,000 crore. Five years and a pandemic push later, Snapdeal managed to reduce its losses to less than Rs 200 crore, while its arm Unicommerce has turned profitable. The e-commerce startup was set to go public, but layoffs in the global tech sector and falling ad revenues have dragged down stock prices, forcing Snapdeal to push off its IPO.
Caution turning into a trend
The initial public offering was supposed to raise more than Rs 1251 crore for Snapdeal, which had applied for approval from SEBI in December last year. According to reports, Snapdeal filed a request to withdraw its IPO with the market regulator earlier this week. After Paytm and Zomato’s stock market debuts didn’t go as planned, others such as Droom, PharmEasy and boAt have also stepped back from planned IPOs.
Big crashes and fading investor confidence
Although Snapdeal cited market conditions without going into details, it may have pushed off listing plans since investors aren’t too confident about tech stocks. Snapdeal also doesn’t enjoy the same level of popularity as Amazon or Flipkart among the consumers, despite marketing itself as a platform for affordable products. Overvaluation has led to Paytm’s stocks falling by 76 per cent after a failed IPO and Zomato also losing half of its value, while Snapdeal had placed the valuation at $1 billion for its first share sale.
Jostled by headwinds
This year, the Indian startup ecosystem is also facing a crisis because funding has gone down by 35 per cent, and too much expenditure has burned hole in their finances. The rising costs have also left more than 17,000 startup employees without a job amid layoffs. Such conditions affecting the sector aren’t helping the waning confidence of share buyers when it comes to new-age digital startups.
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