InvestorQ : What are the important takeaways from the Paytm listing, the crash and the bounce?
sarah Leo made post

What are the important takeaways from the Paytm listing, the crash and the bounce?

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Rashi Mehra answered.
6 months ago
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Let us first look quickly at the Paytm listing and post listing story. In just 2 days after listing, Paytm had lost 41% and recovered 40% from the lows. However, it is still 18% below the IPO price, although the strength on Friday was commendable. Paytm is backed by big names like Ant, Softbank & Berkshire are still confident. The fall in Paytm was stemmed after big anchors investors like Blackrock and CPPIB entered at lower levels to give confidence.

One important takeaway from the Paytm story is that there something called the Law of large numbers in IPO listings. It is easy for a small stock like Latent View or Paras Defence to give multi-bagger returns on listing, not for Paytm with a market cap of Rs.120,000 crore. Paytm is a key lesson that IPO market is also fraught with risk and not a ticket to easy riches, irrespective of the heady returns that many IPOs gave in recent times.

The second important takeaway is that not all digital IPOs are the same. So for every Zomato and Nykaa there will be a CarTrade and Paytm. Like traditional business models, even digital models are different as cheese and chalk. In the case of Nykaa and Zomato outcomes can be demonstrated in the short run, while Paytm is more a long-haul model. Expect accordingly.

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