Leading global investor Morgan Stanley has done it again. The company has devalued Flipkart for the second time in 2016. Morgan Stanley has reduced the company’s valuation by 15.5 %, putting the company’s total value at $9.4 billion, a steep drop from $15.2 billion in June 2015. Earlier in May, the ecommerce major’s two investors had marked down the company’s market value.
“They’re very small investors. It’s a global phenomenon; it’s not specific to Flipkart. The funds have their way of (calculating valuations) which isn’t clear. If in future they mark up our valuation by 30%, it’s not like we’re suddenly going to be happy.”
‘Can we panic now?’
The Indian ecommerce major has not had it very smooth in the recent past. Devaluations and quickly emptying coffers notwithstanding, the company has been in the limelight for its IIM hiring debacle. Flipkart recently picked up a bunch of IIM graduates, and pushed their joining dates to December at the last minute.
The six month deferral has affected the hires’ travel and accommodation plans, says Sapna Agarwal, Head Career Development at IIM B. She says,
“Students were expecting to join in a couple of weeks and were told of delay at the last minute. Travel plans, accommodation plans had already been made. Students are now anxious about whether the job offer would finally be honoured.”
This unprofessional move might make leading educational institutions from thinking twice before inviting start-ups for campus recruitment.
Rivals make hay
The organisation’s restructuring might be a significant reason for the company’s rickety steps, but the industry is not going to wait till Flipkart regains its pace. The company needs to look at strengthening its leadership team, and bring in industry veterans to help salvage its fortunes.