As shares off food delivery platform operator Zomato tanked over 13 per cent to record lows on Monday, wiping out more than Rs 89,000 crores, investors took to Twitter to urge others not to invest in loss-making companies.
Interestingly, former BharatPe founder and Shark Tank India judge Ashneer Grover had in May suggested that buying Zomato shares, even when it had been falling for months, wouldn't be a bad idea.
"It’s all about perspective," Grover had tweeted. "If you were a Zomato employee and exercised your ESOP (employee stock ownership) at Rs 140 or higher price post IPO, you probably paid more cost per share as Income Tax, than what you can buy it today from market freely. At Rs 56 per share price, markets are giving everyone ESOPs."
It’s all about perspective. If you were a Zomato employee and exercised your ESOP at ₹140 or higher price post IPO, you probably paid more cost per share as Income Tax, than what you can buy it today from market freely. At ₹56 / share price, markets are giving everyone ESOPs ;)— Ashneer Grover (@Ashneer_Grover) May 9, 2022
Last year, Ashneer Grover had made a Rs 150 crore personal application in the Zomato IPO.
Interestingly, he had the same advice to offer when it came to Paytm whose share prices too were plummeting.
@Paytm stock is a screaming BUY ! It’s valued at $7B ; Funds raised itself is $4.6B ; Cash in Hand should be $1.5 B. So at CMP of ₹600, the market is saying value created is $5.5B after having spent $3.1B over last 10 years. That’s less than Bank FD rate. BUY !!— Ashneer Grover (@Ashneer_Grover) March 17, 2022
On Monday, however, several investors on Twitter urged others not to pour money into companies that have been running in loss for months.
#zomato
Year ago it was listed with ₹116, wid market cap of 1.33 lakh crore. Today, it hit ₹46
Why?
Lock-in period of pre-IPO share ended today~78% (₹613 crore)- locked in from d date of allotment.
Take away: Do not invest in loss making company.
Avoid hope or thesis trade— Geekyblogger (@Deexa19) July 25, 2022
Would I invest when Zomato (CMP 47.8) has corrected over 65%
Current market cap 38K crore
Sales 2022 - 3,600 CR, Loss - 1,098 CR
Even at 10% profit, profit would be 360 CR
At 40 PE (generous), market cap should be 14K croreI would wait for profit to show & reevaluate#Zomato
— Crece Investment (@creceinvestment) July 25, 2022
One of my friend asked me at what price should one invest in Zomato ?Now this is a tricky question.
And I replied -When it shows the first qtrly profit
(of course not out of any one off items)Company first need to demonstrate it has a business plan which can create profits.
— Sajith Aravindakshan (@i_Sajith79) July 25, 2022
The food food delivery platform operator reached the record low after around 613 crore shares or 78 percent of Zomato’s stock came out of the mandatory one-year lock-in after the initial public offer (IPO) on July 23. Analysts had cautioned that the company’s share price may face sell-off pressure.
