NEW DELHI (dpa-AFX) - Paytm suffered yet another double-digit decline on the second day of trading after going public last week. The Indian e-payment merchant lost a total of 40% of its initial valuation in just a matter of two days.
The market debut of the company was covered and anticipated heavily since the massive debut of Zomato, a food delivery app, last month, However, Paytm's $2.5 billion IPO was soon shredded to pieces after the company failed to stay up to its name and as of now, the stock has dropped to $12 billion in market capitalization.
In its recent financial reports published during the weekend, the company announced a higher expense than income resulting in a huge loss. The company was backed by foreign investors like BlackRock Inc. and the Canada Pension Plan Investment Board.
According to critics, the company was too overambitious with its debut as the founder and CEO Vijay Shekhar Sharma had expressed his will to cross the IPO record set by Coal India Ltd. back in 2010.
During the month of October, the company noted a significant rise in gross merchandise value, which was 131% or $11.2 billion higher. The company also disbursed 400% more loans during this period.
The IPO of the company was also being managed by global spearheads like Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., ICICI Securities Ltd., and Axis Capital Holdings Ltd.
According to the critics, the stock was never supposed to perform so high as the company bleeds too much money and does not have a stable revenue model.
However,despite the pessimism, Sharma is yet to believe in the initial movement and thinks that the stock is not a true indicator of the kind of company that Paytm is. He said to Bloomberg, 'We are in it for the long haul. We'll put our heads down and execute.'
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