Digital Friday>>>Paytm’s Disastrous IPO Leaves Investors Uncertain if the Company can Even Breakeven
Picture Source - Reuters website
Paytm is an Indian multinational technology company that specialises in digital payment systems, ecommerce, and finance. Paytm was initially a platform intended for mobile recharges, but the company quickly grew after it was recommended as a payment option on Uber.
Paytm held their IPO (initial public offering) last week on the 18th of November to make it a public listed company, but the initiative took a turn for the worst just minutes after the IPO. The stock had an initial issue price of Rs 2150, but it plummeted by almost 30% within a couple of hours of trading. The dip in the company’s stock value cost them an estimated $5.7 billion in market value.
However, a catastrophic IPO isn’t the only challenge the company is facing, investors are also losing confidence in Paytm’s ability to earn a profit. The company has lost millions of dollars last year and they seem unlikely to turn the tide in their upcoming financial reports. Analysts at Macquarie expressed their concerns over Paytm’s business model and commented that Paytm is going up against a stiff resistance from other big tech companies who operate in the industry. They commented, “Most things that Paytm does, every other large ecosystem player like Amazon, Flipkart, Google etc. are doing”.
Paytm has a large following, with over 337 million registered users and 22 million merchants who accept payment transfers from their app. However according to Prashant Gokhale, the Chief Operating Officer at Aletheia Capital, the main problem that Paytm has is converting those consumers into revenue streams. He further commented that they offer other services such as stockbroking and other financial services which can generate revenue, but they are in markets which already have fierce competition.
The CEO of Paytm, Vijay Shekhar Sharma, acknowledges the company’s poor performance in the IPO, but he remains optimistic that the company can thrive amongst the uncertainty. He comments “I would say that it is very early days to say that we would not be profitable … our numbers and revenues will do the job of talking”.
November 26th 2021 | 9:30 PM