Paytm’s listing was a nightmare
the stock prices have slumped by ~70% from its listing price.
Various theories are making the rounds.
+ Was it the overall market sentiment around the time of listing that failed to provide the momentum to this gigantic public issue?
+ Was it more to do with the lofty private equity valuation that the capital markets failed to stomach?
Let’s talk a bit more on the latter.
The pitches made to Pre-IPO investors contains a great deal of information on the roadmap, the KPIs of the business and how they all add up to the valuation that they seek.
On the other hand, the prospectus filed prior to an IPO often do not disclose the details of the valuation exercise or other relevant metrics in such granularity.
Is this information asymmetry backfiring for Paytm?
I’m sure Vijay Shekhar Sharma is irking to talk about these internal metrics – but obviously can’t because:
1/ It could expose a lot of strategic initiatives already in the works
2/ It could allow competition to learn/adapt far quicker
All that this controlled silence has resulted in, is to create a cloud of uncertainty around the company’s fundamentals
- which has lead to a panicked sell-off
- leading to a drop in MCap.
But is this really a bubble – like some experts say?
Let me know your thoughts on this.