E-commerce major Snapdeal has shelved its $152-million IPO (initial public offer) plans amid a rout in tech stocks in the prevailing unfavourable market conditions.
Snapdeal told NDTV that the company is withdrawing the IPO papers which were filed a year ago with the Securities and Exchange Board of India (SEBI).
Softbank-backed Snapdeal may reconsider its IPO plans depending on the company's need for capital and market conditions.
It has been a roller-coaster ride in the past few months for new-age tech companies. The stocks of most of these companies have nosedived as recession fears gripped the market amid the Russia-Ukraine war. A series of rate hikes by the Fed Reserve to rein in inflation further dampened investor sentiment. Large-scale tech layoffs further accentuated the concerns.
Snapdeal's rival in India, Amazon, for example, is likely to show the door to staff from various departments. Amazon employs more than 1.6 million globally.
On the other hand, Walmart-promoted Flipkart India had reported that its loss widened to over Rs 7,800 crore for the financial year 2021-2022, news agency PTI reported.
The Indian e-commerce market is ever-expanding and many firms are eyeing a larger piece of this multi-billion-dollar market. Founded by Kunal Bahl and Rohit Bansal in 2010, Snapdeal was an early bird in the e-commerce space but the fierce competition saw cash-rich Amazon and Flipkart surge ahead.
Snapdeal is the fifth tech company in India which has deferred its IPO plans. Earlier, start-ups like Pharmeasy, boAt, Droom, and Appameya Engineering had deferred their plans for coming out with a public offer in difficult market conditions.
TPG and Prosus-funded PharmEasy had filed papers for a $760-million IPO. Wireless earphone manufacturer boAt Lifestyle called off IPO plans in October this year.
These new-age companies decided to defer their IPO plans amid a hammering of new-age stocks in the market. These include Paytm Nykaa and Zomato, the poster boys in the start-up universe. As these stocks find themselves at the receiving end of investor fury, investors have lost substantial wealth.
Market analysts have observed that poor investor sentiment around new-age stocks can only be partially attributed to geo-political situations. The larger concern is about the profitability of these companies.