Zomato‘s share price today hit a new lifetime low of Rs 57.65 per share on NSE in Friday’s Trade. The tech stock has been hitting a new low on a regular basis as it made a new low today in the 5th straight session. On Friday, the market capitalization of Zomato crashed down to Rs 45,381.69 crore, its lowest since listing. This is Rs 87,732.69 crore lesser than its peak cap of Rs 1,33,144.38 crore in November when the stock had scaled an all-time high of Rs 169.10.
Zomato share price today opened with a downside gap of Rs 1.85 per share and went on to hit a new low of Rs 57.65. After hitting its life-time high of Rs 169 per share levels in November 2021, Zomato shares have lost around 65 per cent in last 4-5 months.
Zomato has not only been burning cash for its growth but has actually burnt investors’ money in the last six months. The shareholders of the food delivery platform have turned poorer by Rs 87,800 crore following a 65 per cent crash in the stock from the all-time peak.
Zomato made its stock market debut on July 14 last year. Defying estimates, the shares opened at a premium of 53 per cent over its IPO price, clinching a market capitalization of Rs 1 Lakh Cr. The trajectory continued as Zomato shares reached their all-time high of Rs 160.30 on November 15, 2021.
Then came the free fall. By March 2022, the share prices had almost halved, hovering in the range of Rs 80-82.
According to stock market experts, Zomato is facing cash flow problem as its operational revenue is quite high. They said that Zomato’s business model is much depended on the volume, which is not visible for its peer as well. In fact, Zomato peers across the world are facing the same problem and such tech stocks like Google, Netflix, Amazon, Nykaa, etc. are facing heavy sell-off these days. They said that Zomato shares are expected to remain on the sticky wicket and there can be more downside if it breaks its current support level of Rs 50 apiece.
However, the recent two-day decline in Zomato shares can be attributed to the Reserve Bank of India’s (RBI’s) surprise announcement on Wednesday to hike the repo rate by 40 basis points. It also increased the cash reserve ratio by 50 basis points to 4.5 per cent.
Santosh Meena, Head of Research, Swastika Investmart Ltd., said: “The current scenario of rate hikes has severely impacted tech stocks; investors have realized that the profitability and cash flows are more important than just revenue growth & their sky-high valuations aren’t sustainable. Similarly in India, Zomato dipped to a record low, losing 65 per cent from its lifetime high. The company is still a loss-making one, and it is expected to break even in terms of operating profitability by FY24, the company was demanding an FY21 P/S multiple of 29.9x during its IPO which was high compared to its global peers, Hence, a reality check has led to such severe correction.”
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