The shares in new-age companies continued to plummet as Nykaa, Delhivery, Cartrade Tech and Zomato all reporting decreases between three and seven percent. Analysts have said that the selling off on US technology shares as well as an expiration date for the lock-in time in November 2022 had weakened investors’ sentiment.
In the month that ended on March 31 ET Ecommerce’s Profitable and Non-Profitable indexes experienced drops of 5.5 percent and 10.08 per cent, respectively.
The price at which shares closed FSN E-Commerce Ventures’ shares that run the fashion website Nykaa was down 6.3 percent to 983.55 which is the lowest price for the company in its IPO in November the previous year. The stock is trading at 62% lower than its 52-week peak after declining by around 23% over the month prior. On the 26th of November 2021, the stock was at record levels at 2,574 rupees.
Prospective buyers might not know which option they should pick According to Sachin Dixit Analyst of JM Financial. “New companies of the new age such as Nykaa, PB Fintech, Delhivery and Paytm are likely to be able to see their lock-in expire December 2022.” explained Dixit. “If even a small percentage of investors decide to sell their investments and sell their shares, the price of the share could plummet dramatically.”
As per the regulations that pre-IPO investors are required to keep their share for six consecutive months following the IPO. This lock-in time period had to be one year prior to April 2022. In the case of Zomato and Cartrade the lock-in limitation is now past its expiration date.
Due to their aversion towards startups and technology globally Investors are worried that the expiration of the lock-in period may result in a surge of shares being traded on the market.
After the logistics firm Delhivery has reported a subdued quarter-on-quarter performance this week the shares of Delhivery dropped by more than 32% on Thursday and Friday, below its IPO price. Delhivery stated that the number of its supply chain and truckload services decreased over the three months that ended in September 2022. The shares of Delhivery are trading at 28 percent lower than their offering rate of Rs. 487, and 51% lower than the 52-week peak.
The shares of One 97 Communications, the company which owns the Paytm brand, are being sold at 642.45–a 70% drop in value from the IPO price. Similar to Zomato which unifies restaurants its inventory, the stock of that company has dropped 63 percent from its 52-week peak and currently trades at the price of Rs. 62.60 that is less than 18% of its IPO price of Rs. 76.