Flipkart can’t catch a break from markdown spiral; Morgan Stanley devalues it again

Editor | Sep 10, 2020

Frequent devaluation by investors continues to haunt Flipkart, which is on its way for an ambitious round of funding. A mutual fund headed by Morgan Stanley has marked down the value of Flipkart’s shares by 3%.

As per the regulatory filings with the US Securities and Exchange Commission, the investor values the ecommerce giant’s each share at $50.51 from the earlier value of $52.13 per share.

In Morgan Stanley’s last devaluation in November 2016, Flipkart’s valuation dropped down from $15.2 billion to $5.57 billion. The latest one has brought it further down to $5.37 billion.

What does it mean for Flipkart?

The ecommerce leader is not new to this. This is the 5th devaluation (2016-2017) by Morgan Stanley. Earlier this year, T Rowe Price marked down Flipkart’s share by 4.4%. In January 2017, the news came out that Fidelity Investments devalued it by 36% in November 2016.

The Bansals appear to be unfazed by these devaluations.

Back in December, co-founder Sachin Bansal had said,

“See, we are not a public company, so we don’t release our numbers publicly. Any investor who has an opinion on our valuation outside, including who are already invested in us, they are doing it (markdowns) based on some public information which is accessible to everybody… As we’ve always said, valuation is what will happen when a real transaction takes place and not just on paper.”

In spite of what the founders believe, the constant devaluations is one of the contributing factors (if not the only) to the changing way the investors see Flipkart. From being the blue-eyed boy of India’s ecommerce market to becoming a ‘source of worry’ for investors, Flipkart is spiralling down fast.

For the very same reason, Tiger Global’s former employee Kalyan Krishnamurthy was rehired by Flipkart and later took over as the company’s CEO.

Let’s wait for the ‘real transaction’ as Bansal said to see if the markdowns would affect the fundraising round.

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Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business. 

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