Shares of Paytm, Zomato, PolicyBazaar and Nykaa — four Indian tech startups that went public last year — on Monday tumbled to their record lows since market debuts last year as analysts predict a global market correction amid U.S. investors worrying about the prospect of high interest rates.
Shares of Paytm dropped more than 6% to as low as ₹880 ($11.8) on Monday, the lowest since its public debut in mid-November. The market cap of the mobile payments firm, which made its debut with an issue price of ₹2,150, has shrunk to $7.7 billion, less than half of the $16 billion valuation at which it raised $1 billion in a private financing round in the second half of 2019.
Nykaa shares dropped more than 13%, to ₹1,693 ($22.6) apiece, down from its all-time high of ₹2,574 ($34.5). At more than an 18.5% fall, shares of Zomato saw the steepest drop among the four aforementioned tech firms. The shares dropped to as low as ₹91.7 ($1.23) apiece from an all-time high of ₹169.10 ($2.27). PolicyBazaar fell more than 9% to ₹766 ($10.2) apiece to nearly half of its all-time high of ₹1,470.
The recent tumble — which hasn’t impacted other Indian stocks as severely — comes as shares of tech companies that have rallied in recent years amid the pandemic begin to see what many analysts are terming as “correction.”
The rally has also helped startups globally raise capital at record high valuation jumps and pace. But several investors are now publicly telling startups that those days are about to be over — for an indefinite period of time, at least.
“Market sentiment changes faster than startups can change operations, cost structures or monetization levers,” said Shailendra Singh, a venture capitalist at Sequoia Capital India, in a tweet last week.
“Looking forward to a much needed correction in startup funding environment; thankfully, conversations are back to focusing on revenues, products, unit economics, saving dollars.”
At an Axios conference last week, Rajeev Misra, chief executive of SoftBank Vision Fund, said that SaaS stocks in the U.S. have gone down from 20 times of their revenue to 12x. “In the private markets they’re still at 20x or higher… I believe that gap is going to tighten over the next six months,” he added.
This is a developing story. More to follow…