Reasons why zomato stock is falling? –
Shares of Zomato fell to all time low which is down 50% from its all time high. IPO size of Zomato was Rs 9375cr, stock listed on exchanges for public trading on July 23 last year and surged 65.8% on its debut.
Zomato is a online food delivery platform. Its average monthly transacting users have increased to 15.3mn during October to December quarter in 2022 from 8.4mn during same quarter last year. Also they have got 5.5mn new users. Zomato is still loss making company but it is well funded by the investors.
Zomato earns 90% revenue from food delivery segment. Also it earns from advertisement and pro-membership. Delivery market is growing and Zomato is brand name in this segment.
We will discuss some of the reasons why Zomato stock is falling?
- Due to increase in inflation, announcement of rate hikes, US and Indian stocks are in declining phase. Due to increase in rate hikes, tech investors are on sell off mode in worldwide. This is the most important reason why Zomato stock is falling?
- Zomato is loss making company, the company reported loss of Rs 67.2cr which was worse than expected in quarter that ended in December 2021. The loss was mainly due to high employee cost.
- According to many market experts, these tech stocks were overvalued during the IPO.
- GST rule of 5% tax on restaurant services.
- Strong competition from Swiggy is also the one of the reason.
- As Covid restrictions are lifting, people have begun to shift towards dining out habits.
Now we will discuss some strong points,
- Zomato is a well funded company by the investors.
- Company narrowed loss of Rs 67.2cr from Rs 352.6cr in same quarter last year.
- Revenue jump of 84% yoy from Rs 609cr to Rs 1112cr.
- Diversification in grocery delivery and B2B segments.
- Increase in average monthly transacting users.