Paytm IPO Investors Lose 50% Wealth As Shares Slide To Record Low: What Next?
The fintech major Paytm’s stock has crashed more than 21% over the last 9 sessions, and it appears as though no amount of positive news or developments related to Paytm would stop the stock from tanking.
The counter had hit a fresh all-time low of Rs 955 per share on Friday, losing half of its IPO value of Rs 2,150/share.
The company, since its public listing on November 18 almost 2 months ago, has never once posted a profit.
Paytm Tanks Further
On Nov 18, the country’s biggest public issue, Paytm’s, opened at a discount of 9.3% against its issue price of Rs 2,150, at Rs 1,950/share on the NSE and 9.1% lower at Rs 1,955 on the BSE.
The stock plummeted further on the second day, and declined 10% more and lost Rs 50,000 crore of its market capitalization in the second day of its listing. In two days since its listing, the stock dived about 37%.
The stock’s IPO turned out to be overvalued and so investors booked profits. However, despite declining 50% from its issue price of Rs 2,150, the stock free fall shows no relief.
However, in Friday’s session, the stock has rebounded almost 5% in Friday’s session, trading at Rs 1,081.3 apiece, up 4.8% in afternoon session on Friday.
Macquarie on Paytm
Paytm’s listing spooked investors after renowned foreign brokerage Macquarie’s hawkish tone on the overvaluation of the stock to be listed.
Macquarie termed the company as a ‘cash guzzler’ and set a price target at Rs 1,200 on the stock, later lowering its target on the stock to Rs 900 apiece, a downside of 23% compared to its issue price of Rs 2,150 at that time.
“We could have priced the IPO higher if we wanted to but we thought that this is the right balance for making sure that the investors who come in the Paytm IPO should be treated very fairly and this is where we were comfortable,” stated Madhur Deora, President & Group CFO, ahead of Paytm’s listing on Nov 18.