Magical Trade
Saturday, January 28, 2023
  • Home
  • Trade News
  • Email Whitelisting
  • Privacy Policy
No Result
View All Result
  • Home
  • Trade News
  • Email Whitelisting
  • Privacy Policy
No Result
View All Result
Magical Trade
No Result
View All Result
Home Trade News

Why Paytm stock prices crashed on its market debut

by
November 19, 2021
in Trade News
0
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter

The Paytm IPO has been under the spotlight for months, but it failed to live up to the hype on its listing day.

One97 Communications, the parent company of the country’s largest digital payments startup, made an underwhelming debut on Indian bourses today (Nov. 18). Its share price crashed by up to 26% to as low as 1,603.92 rupees ($21.62) in the morning, from the issue price of Rs2,150.

RELATED POSTS

The two financial stocks Karen Firestone favors coming out of earnings

Pro Picks: Watch all of Friday’s big stock calls on CNBC

While it recovered slightly later, it remained at a discount of 9%. The stock closed today more than 27% lower at Rs1,564.

Backed by several global marquee investors, Paytm has spearheaded the country’s digital payments space, especially since the demonetisation exercise in 2016. While the public debut had all the makings of a blockbuster, the shares were oversubscribed by only 1.89 times—2.79 times by sophisticated buyers and 1.6 times by the retail ones.

There were many red flags on the offer right from the beginning.

Paytm’s problems were always in plain sight

Analysts cited the expensive valuations for a company that had not made profits for the past eight consecutive years. It was only in this fiscal that Paytm lowered its expenses and reported a considerably narrower loss at Rs1,596 crore compared to a year ago.

Profitability, though, is still not on the horizon.

Besides, the company spread itself too thin over the years, diversifying into areas such as payments, financial services, travel, and movie ticketing, fantasy sports, and e-commerce. This, too, did not reap desired revenues.

“Dabbling in multiple business lines inhibits Paytm from being a category leader in any business except wallets, which are becoming inconsequential with the meteoric rise in UPI payments…We, therefore, question its ability to achieve scale with profitability,” the brokerage firm Macquarie Research said in a note to its investors.

Stiff competition from well-capitalised rivals like Google Pay and Walmart-owned Flipkart’s PhonePe also posed challenges.

What to do if you have been allotted Paytm shares?

Stock market analysts suggest that investors, who have been allotted Paytm shares, book losses and exit. For those keen on a fintech stock in their portfolio, they recommended more promising alternatives.

“Holding this stock will not help. If the listing is bad, investors will not get an exit at a higher price. Book a loss here and get away from the stock,” A K Prabhakar, head of research at IDBI Capital, told Business Standard newspaper.

Macquarie Research initiated an “underperform” rating on One97 Communications ahead of its listing earlier today, saying its business model lacks focus and direction.

The broking firm also emphasised that competition is likely to hamper medium-term growth. “Unless Paytm lends, it can’t make significant money by merely being a distributor,” it said in a report.

ShareTweetPin

Related Posts

The two financial stocks Karen Firestone favors coming out of earnings

by
January 28, 2023
0

Karen Firestone of Aureus Asset Management is excited about American Express and Visa coming off their earnings reports this week...

Pro Picks: Watch all of Friday’s big stock calls on CNBC

by
January 28, 2023
0

Market Movers rounds up the best trade ideas from investors and analysts throughout the day. The pros discussed Intel ....

Amazon to start charging delivery fees on Fresh grocery orders under $150

by
January 28, 2023
0

In this article AMZN Follow your favorite stocksCREATE FREE ACCOUNT Brendan McDermid | Reuters Amazon will start charging delivery fees...

House Speaker McCarthy spoke with Musk about making Twitter ‘fair on all sides’

by
January 28, 2023
0

U.S. House Republican Leader Kevin McCarthy (R-CA) celebrates being elected the next Speaker of the U.S. House of Representatives in...

Sam Bankman-Fried tried to influence witness through Signal, DOJ alleges

by
January 28, 2023
0

Former FTX chief executive Sam Bankman-Fried (C) arrives to enter a plea before US District Judge Lewis Kaplan in the...

Next Post

Stocks struggle on Friday after Austria lockdown, but tech shares post winning week

CDC panel unanimously endorses Pfizer and Moderna Covid boosters for all U.S. adults

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

email

Get the daily email about stock.

Please Enter Your Email Address:



By opting in you agree to our Privacy Policy. You also agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

MOST VIEWED

  • Fund manager believes FAANG is dead — says now it’s all about MANTA

    0 shares
    Share 0 Tweet 0
  • Forget Tesla — this auto stock is the one to buy right now, analyst says

    0 shares
    Share 0 Tweet 0
  • Bank of America names its top global tech stocks — including one it says has upside of 100%

    0 shares
    Share 0 Tweet 0
  • Josh Brown says Nvidia’s potential is ‘scary’ ahead of a potential AI boom

    0 shares
    Share 0 Tweet 0
  • Cut Your Retirement Spending Now, Says Creator of the 4% Rule

    0 shares
    Share 0 Tweet 0
  • Home
  • Trade News
  • Email Whitelisting
  • Privacy Policy
All rights reserved by www.magicaltrade.net
No Result
View All Result
  • Email Whitelisting
  • Home
  • Privacy Policy

All rights reserved by www.magicaltrade.net