Shares of the newly listed e-commerce giant Meesho witnessed a dramatic reversal of fortunes this week, tumbling over 23% in just three consecutive trading sessions. This sharp correction comes on the heels of a spectacular debut on the stock exchanges earlier this month, wiping out a significant portion of the initial investor enthusiasm.
A Meteoric Rise and a Swift Fall
Meesho made its highly anticipated entry to the bourses on December 10. The stock was listed at a robust premium, opening at Rs 162.50 on the National Stock Exchange (NSE). This represented a handsome premium of Rs 51.50 (46.40%) over its issue price of Rs 111 per share. On the Bombay Stock Exchange (BSE), it listed at Rs 161.20, a premium of Rs 50.20 (45.23%). The stellar debut was followed by a rally that saw the stock surge approximately 65% in the four sessions following its listing.
However, the tide turned sharply this week. On Tuesday, December 23, Meesho's shares plunged 10%, hitting the lower circuit at Rs 185.34 during the day before recovering slightly. This marked the third straight session of heavy selling pressure. The stock finally closed at Rs 187.75 (down 7.08%) on the BSE and at Rs 187.25 (down 7.15%) on the NSE.
Block Deals Trigger Market Cap Erosion
The precipitous fall has had a direct impact on the company's valuation. The sustained selling dragged Meesho's market capitalisation below the psychologically significant Rs 85,000-crore mark. Market analysts point to a series of large block deals as a key trigger for the downturn.
Data from LSEG, cited by Reuters, indicated that a substantial volume of 4.9 million shares changed hands across nine block deals on the NSE. These transactions were executed at a significant discount, ranging between 3% to 10% below the previous closing price, signaling strong profit-booking by large investors.
Behind the Blockbuster IPO
Meesho's initial public offering (IPO), which was open for subscription from December 3 to December 5, was a resounding success. The issue was oversubscribed a massive 79 times, with institutional investors leading the charge by bidding 120 times their allotted portion.
The company raised a total of Rs 5,421.20 crore from its public offering. This comprised a fresh issue of shares worth Rs 4,250 crore and an offer for sale (OFS) of Rs 1,171 crore by existing shareholders. In its Draft Red Herring Prospectus (DRHP), Meesho stated its intention to use the net proceeds from the fresh issue primarily to fund the expansion of its subsidiary, Meesho Technologies.
The planned investments include bolstering cloud infrastructure and driving marketing and brand-building initiatives. The company's financial performance has shown promising trends, with revenue for FY25 rising to nearly Rs 9,390 crore from Rs 7,615 crore the previous year. Simultaneously, its losses narrowed dramatically to Rs 289 crore from a staggering Rs 3,942 crore.
Brokerage firm Choice International, in a recent report, highlighted Meesho's position in a high-growth phase, projecting a robust 31% Compound Annual Growth Rate (CAGR) in revenue for the period between FY25 and FY28. Despite the current volatility, this long-term growth outlook remains a key point of focus for market watchers assessing the e-commerce platform's journey on the public markets.
