Zomato plunges 14% to record low as IPO Lock-up period ends
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SHARES of Indian online food-delivery and restaurant platform Zomato plunged in Mumbai after the end of a lock-up period for investors that had stakes in the company prior to its initial public offering (IPO).
The stock dropped as much as 14.3 per cent to a record low of 46 rupees (S$0.80).
Zomato's offering last July raised close to US$1.3 billion and lured investors including Morgan Stanley and Fidelity Investments. China's Ant Group was an early holder, having initially invested in it in 2018, owning a stake of about 16 per cent before the share sale.
After a surge following the debut about one year ago, Zomato shares pared those gains to now trade about 40 per cent below the IPO price. That compares to a 4.9 per cent increase for the Nifty 50 Index over the same period.
Zomato's successful IPO last year set the tone for the coming-out parties of a generation of Indian unicorns, including digital-payments firm One 97 Communications. But their shares have also plummeted as doubts persist about the valuations of loss-making technology firms, particularly as global macroeconomic uncertainty mounts.
The company is competing against deeper-pocketed rivals including Amazon.com and Naspers-backed Swiggy, presenting hurdles in how quickly it can become profitable. Its recent acquisition of fellow startup Blinkit in quick-commerce, another high-competition, high-cash-burn segment, has left investors unimpressed.
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The delivery giant reported a smaller-than-expected loss for the March quarter. Some analysts anticipate Zomato will narrow its red ink over time, and point out that the meal-delivery market remains in its infancy.
Zomato is the latest Asian technology company to see shares under pressure following the end of IPO lock-up periods. Chinese artificial-intelligence-software maker SenseTime Group's collapsed in Hong Kong last month once restrictions on sales by cornerstones ended. BLOOMBERG
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