India’s largest IPO Paytm just had a disastrous debut on Thursday – its shares dropped nearly 27% 📉 in a single day.
27%?! What happened to Paytm?
Wait… who’s Paytm first? It’s a mobile payment super-app (just like Alipay/Grab Pay) – we can pay through it both online and offline, e.g. utility bills, Uber, grocery, and supermarket…
- Paytm is short for Pay through mobile, and also rhymes with ATM. It has over 300 mln users now.
- Stronger backers behind 🤝 Paytm have some notable backers, like SoftBank, Warren Buffett, and Ant Group (Alipay’s parent).
Paytm’s original plan is to raise USD 2.5 bln with a roughly USD 20 bln valuation. However, its stock price once dropped 27% on its first day of trading…
That’s not good… why did it crash?
Err… investors have many concerns over Paytm. Some think it’s too expensive, others think the following 👇
- It’s still not profitable 💸 Paytm is still not making money, as it lost around USD 51.5 mln last quarter, and only expects to break even in late 2022.
- More competition ahead? US companies like Google and Walmart have also entered India, taking away market share from Paytm.
Paytm’s stock dropped 27% on the concerns above. It would have fallen further if trading was not temporarily halted to prevent panic selling – called a “circuit breaker” professionally.
- I’m not concerned 🤷 Paytm’s founder is not worried, as he believes the slump does not indicate Paytm’s real value.
- A real example – Facebook once lost over 50% after it IPO’ed in 2012… but has since gained over 800%.
🐿️: Stock trading with voice commands – that sounds cool… I just hope pocket-dialing won’t become pocket trading.