India's largest IPO Paytm had everyone hooked to it until Thursday when it all came crashing down. The stock went down by about 27% and eventually hit the lower circuit on its listing day. This caught a pessimistic trend on the social media platforms about big-ticket IPOs. Analysts have argued that the tepid sentiment of the overall market was the reason, but many believe otherwise. Let's see what's the unpopular opinion!

Reasons Behind The Crash

One of the obvious reasons is the intense competition in the fintech space. The presence of Phonepe, Google Pay and others threaten Paytm's market share because it's not a niche market. Another reason was Macquarie's report that said the company's valuation is expensive. The global brokerage said clearly that Paytm is not worth more than Rs 1,200 crore. Additionally, Paytm still doesn't have a license to lend which remains one of the biggest risks to the investors. Moreover, the business model remains confusing. The company has all sorts of services- online payment, e-wallet, insurance, personal loans, phone recharge etc. There’s no strong niche business.

One might ask- how does Paytm have big shareholders? Well, that's because big shareholders have a big risk appetite and Paytm was a few of the early entrants in the fintech biz.

Why Should It Bother You?

Investors' wealth has eroded substantially after Paytm's weak listing. The street indicates that the shares could further continue to fall until it reaches the intrinsic value. Valuation Guru Aswath Damodaran and others believe that Paytm is a cash-burning machine. Many investors have also pointed out that Paytm is largely a Chinese company as Alibaba, Ant Group and SAIF Partners own 54% shares in the company. All these concerns will loom in the air until the company shows a recovery in its earnings.

What’s The Near Future Like?

India’s spending habits and reliance on e-commerce platforms will boost the fintech platforms. Our future will be fully digital in just a few years. Platforms like Paytm will be required in the near future, which paints a promising future for the fintech space. Given the intense competition, it’s likely that Paytm will struggle. Indeed the company has a million customers but its capability to earn will only depend on how much of a bigger player it will become in the future.