Shares of Indian fintech startup Paytm’s crash 28% on debut of India’s largest-ever initial public offering
The highly anticipated IPO of Indian fintech startup Paytm plunged by 28% on its first day of trading. Paytm’s shares sank as much as 28 percent in a weak stock market debut on Thursday, a week after the country’s biggest-ever initial public offering.
PayTM shares opened below the 2,150 rupees ($28.60) issue price, before closing down a whopping 27% at 1,564 rupees ($21). When the dust finally settled, the unicorn startup raised $2.5 billion(183 billion rupees), making it India’s largest-ever IPO and even surpassing Coal India’s in 2010, according to data from Refinitiv. Paytm shares extended losses after opening as the stock fell as much as 28 percent, from the issue price, to hit an intraday low of 1,560 rupees.
Meanwhile, some analysts were not surprised by Paytm IPO’s performance. They said the IPO flop reflects fears about Paytm’s business. Last year, Paytm lost hundreds of millions of dollars. The startup also faces steep rivals and it’s also up against growing competition from some of the biggest tech companies in the world.
We covered Paytm back in May when the Indian digital payments leader announced its plan to go public by November with a target valuation of around $25 billion to $30 billion. Less than two weeks ago, Paytm later boosted the size of its initial public offering to 183 billion rupees ($2.44 billion), as it plans to list in India around November with a valuation of around $25 billion to $30 billion
Founded in 2010 by Akshay Khanna and Vijay Shekhar Sharma, Paytm is owned by one of India’s mobile-internet firms, One97 Communications. Its investors include SoftBank, SAIF Partners, Alibaba Group, and Ant Financial.
Paytm is a payment gateway that provides payment services to merchants and allows consumers to make seamless mobile payments from cards, bank accounts, and digital credit among others. The company maintains an open culture where everyone is a hands-on contributor and feels comfortable sharing ideas and opinions.
Paytm is also backed by Japan’s SoftBank Group, Warren Buffett’s Berkshire Hathaway Inc (BRKa.N), and China’s Ant Financial. Paytm’s top competitors include Ant Financial, Flipkart, PayPal, FreeCharge, MobiKwik, and Razorpay. The company is now estimated to be worth about $14 billion.