The shares of Meesho dropped 10 percent on December 23, extending significant losses for the third consecutive session. This comes after the newly-listed stock rallied 65 percent in just four sessions, before losing steam.
Meesho shares hit the lower circuit at Rs 185.34 apiece briefly on Tuesday, before recovering some losses. The stock has now fallen more than 23 percent in just three sessions, pushing the market capitalization below the Rs 85,000-crore mark.
The sharp fall today comes as 4.9 million shares were traded across nine block deals on NSE at 3-10 percent discount to previous closing price, according to LSEG data quoted by Reuters.
What lies ahead?
Meesho is a strong long-term business, but the current price after the sharp rally makes the near-term risk reward unattractive, said Abhinav Tiwari, Research Analyst at Bonanza. While he noted that the company's growth story is convincing, he added that buying shares at such elevated levels won’t fully account for execution risks and the fact that losses are still present.
Meesho's fundamentals are improving steadily, but valuation is the key risk, the analyst added. "The strong IPO subscription and sharp post listing rise suggest optimism may have run ahead of fundamentals. Given this, waiting for a more attractive price could offer a better risk reward," he said.
The fact that Meesho's sharp rally had pushed its price way ahead of target prices set by brokerages shows that a large part of the immediate optimism may already have been priced in, said Harshal Dasani, Business Head at INVasset PMS.
He noted that the company is still transitioning towards consistent profitability. "At this stage, investor confidence is driven more by the perceived long-term opportunity than by near-term earnings visibility," he said.
"While institutional participation post-listing lends credibility, sustaining these levels will require tangible progress on unit economics, operating leverage and competitive intensity management. Unlike established consumer or tech platforms, Meesho is still proving its public-market credentials, where quarterly execution and transparency become critical," he added.
For investors, the focus should shift from headline growth to delivery, he said, explain that questions like how effectively Meesho converts scale into sustainable profitability will ultimately determine whether the post-IPO re-rating holds or normalises over time.
Meesho's bumper market debut:
The stock had made a strong market debut on December 10, listing at Rs 162.50 apiece on NSE. This marked a premium of more than 46 percent from the IPO price of Rs 111 per share.
This came after the Rs 5,421-crore IPO of the e-commerce platform was subscribed 79 times. The stock is currently around 32 percent higher than its listing price.
The stock has jumped around 67 percent from its IPO price, and 14 percent from its listing price.
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