Another Valuation Cut: Fidelity Now Values Meesho At $3.5 Bn

US-based asset management company Fidelity has once again marked down the valuation of Meesho on its book, valuing the ecommerce startup at $3.5 Bn.

This marks a decline of 29% from Fidelity’s peak valuation of $4.9 Bn for Meesho.

At the end of December 2023, the asset manager assessed its stake in the ecommerce unicorn at $27.8 Mn, marking a decrease from the $41.9 Mn initially invested during the second half of 2022 through a specific mutual fund unit, Techcrunch reported.

It is pertinent to note that Fidelity earlier slashed the valuation of Meesho to $4.1 Bn at the end of October.

By the end of October, Fidelity reduced the valuation of Meesho to $4.1 Bn, a decline from its previous funding valuation of $4.9 Bn. This adjustment in valuation happened in the aftermath of a secondary sale transaction last year, during which early investor Venture Highway sold a portion of its stake in Meesho to WestBridge Capital, the publication reported.

Meanwhile, commenting on the latest valuation markdown, a Meesho spokesperson said, “Funds attribute value to their portfolio investments, considering various factors such as the valuation of comparable companies. Based on Fidelity filings, the number of shares held and the current number of total outstanding fully diluted shares, the valuation is assessed at $3.5 Bn. The increase in the number of outstanding shares, notably due to the ESOP pool expansion, could have contributed to this valuation shift.”

Over the past year, Fidelity has consistently reevaluated the valuation of its Indian portfolio startups. In April 2023, it reduced Meesho’s valuation by 9.7% to $4.4 Bn. Later, in July, it internally adjusted it upward by 5.41%.

The US-based firm also trimmed the valuation of the payments solution platform Pine Labs to $3 Bn in October 2023 as against $4.7 Bn at the end of August. The fintech startup was last pegged at more than $5 Bn after raising a $150 Mn funding round in 2022.

It must be noted that valuation methodologies vary from investor to investor and Fidelity slashing the valuation does not necessarily mean that it would be perceived negatively by other investors. However, it may have a ripple effect.

Meanwhile, ecommerce unicorn Meesho is mulling to build a financial services platform and grow its grocery delivery business in the upcoming financial year.

Founded in 2015 by Vidit Aatrey and Sanjeev Barnwal, Meesho once hailed as the poster child of social ecommerce, made a strategic pivot in 2022 to become a marketplace. It counts SoftBank, Peak XV, Fidelity Investments, Prosus, and Meta among its investors.

As the ecommerce sector continues to see strong growth in the Tier II and III cities of India, Meesho is gaining market share and is the fastest-growing ecommerce platform in the country, brokerage Bernstein said in a recent report.

Meesho saw a 32% YoY rise in its user base and has about 120 Mn average monthly average users (MAUs) in December 2023, the brokerage added.