Zomato shares tank 11%; here’s why

The foodtech startup Zomato's share tanked around 11% in early trade on Monday after the lock-in period for promoters, shareholders, founders, and employees ended today. These shareholders comprise about 78% of the total paid-up capital of Zomato. The stock has been one of the worst performing IPO (initial public offering) in the last one year, declining over 65% since its listing in July 2021.

The Zomato shares were listed on bourses on July 23, 2021, with a strong premium of over 51%. It was the country's first startup unicorn to go public.

The shares of the Deepinder Goyal-led company, which fell today after two days of consecutive gain, opened a gap down at ₹50.35 from the previous session close of ₹53.65 apiece. During the opening trade, the stock breached the all-time low mark of ₹50.05 apiece, falling to the new low of ₹46.2, down 14.26%, on the Bombay Stock Exchange (BSE).

The share has fallen 11.16% in the past five days, 26.88% in the past one month, 52.07% in the past six months, 65.94% in the year-to-date period and 65.80% in the past one year.

The technical analysis shows the stock has been highly volatile today with an intraday volatility of 9.53% (calculated from the weighted average price). The stock's delivery volume of 69.46 lakh on July 22 has fallen by -33.3% against the 5-day average delivery volume. The Zomato share is trading lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The stock has traded in a wide range of ₹6.65, and more volume is traded close to low price.

At the time of filing the report, 2.1 crore Zomato shares were exchanging hands in the market, as compared to the two-week average of 35 lakh. Amid the continuous sell-off, the company's m-cap has also fallen to ₹37,754.17 crore.

On the other hand, the benchmark index Sensex is down 0.85%, while IT - Software sector is down 0.34%.

After much talked about listing in 2021, the foodtech company’s share surged to an all-time high of ₹169 apiece in November 2021. The stock had crossed the market capitalisation of ₹1 lakh crore.

Zomato has said it'll release its financial earnings report for the April-June quarter of FY23 on Monday, August 1, 2022.

During the previous quarter, Zomato's net loss more than doubled to ₹359.7 crore from ₹134.2 crore in the corresponding quarter last year. Its revenue, however, jumped 75% YoY to ₹1,211.8 crore vs ₹692.4 crore in the same quarter of the previous fiscal. For FY22, Zomato's net loss stood at ₹1,222.5 crore compared with ₹816.4 crore in the previous year. Zomato’s average order value in FY22 marginally increased to ₹398 compared with ₹397 in FY21. For the top 8 cities, the company saw its average order value increase by 3% in FY22 over FY21.

In May, Zomato had approved a plan to acquire e-grocery firm Blinkit. The deal is part of the company’s strategy to exploit online grocery retail, a business segment that has seen robust growth during the Covid-19 pandemic. As per the deal, Zomato will acquire 33,018 equity shares of Blinkit for ₹4,447 crore at a price of ₹13.47 lakh per share.