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New Delhi CNN –
Paytm, once India’s most popular startup, has seen a stunning decline in the stock market this week, with its value plunging 77% since going public in the country’s biggest IPO in 2021.
Shares of the hugely popular digital payments company have fallen below the daily maximum allowed in Mumbai for two consecutive days, even as India’s stock markets are touching new all-time highs. Paytm is down 36% since the close of trading on Wednesday and about 25% this year.
The company has been struggling since its disastrous market debut in November 2021, when it failed to convince investors it could become profitable in the face of increasing competition from domestic rivals and US tech firms.
It also ran into trouble with regulators – two years ago, the central bank blocked its banking arm from signing up new customers.
Paytm’s stock is now trading at just Rs 487 (about $6) per share. Collision $2 billion in market capitalization has been wiped off in the last two days alone, leaving the company worth just $3.7 billion.
The latest fall comes after India’s central bank tightened its trade.
The Reserve Bank of India (RBI) on Wednesday ordered Paytm Payments Bank to stop taking deposits along with other major services citing “persistent non-compliance”.
Since the notice, which took India’s tech community by surprise, Paytm has gone into firefighting mode to try to calm investors and its over 300 million customers.
But his assurances that he was taking “immediate steps” to comply with regulators, and a conference call held after markets closed on Thursday, failed to stem the slide.
The RBI order “poses a reputational risk to the overall Paytm business and casts doubt on its visibility.” [its] future business performance,” said Manish Choudhary, head of research at brokerage Stockbox.
Paytm launched its payments bank in 2017 as a joint venture with founder Vijay Shekhar Sharma. At the time, it could accept deposits but could not lend money to customers.
In Thursday’s call, Sharma said the central bank’s action is “a momentum booster” and that going forward Paytm will work only with other banks.
Paytm’s app became a household name in the country in 2016, when Indian Prime Minister Narendra Modi suddenly banned the country’s two largest currency notes – about 86% of the country’s cash at the time – in a bid to crack down on tax evasion and illicit wealth. Banned. ,
This move was extremely disruptive For Economy, but this helped Paytm grow at an explosive rate: The company signed 10 million new users within a month. It made us “a folklore name in this country,” Sharma told CNN in 2019.
Source: edition.cnn.com
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