May has created mayhem for Flipkart yet again. For the second time in a row and in a successive quarter, Morgan Stanley Mutual Fund Trust, has yet again lowered the value of its shares in Flipkart by 15.5%. This means that now Morgan Stanley values Flipkart at $9.39 Bn.
The fund marked down the value of its Flipkart shares to $87.9 per share as of 31 March 2016 from $103.97 per share as of 31 December last year. The December value was a 38.2% fall from $142.24 per share in June 2015, as per another regulatory filing by the firm in February.
Previously in February, the fund had marked down Flipkart shares by 27%. Morgan Stanley’s fund had first invested in the ecommerce marketplace when it raised $160 Mn in October 2013.
This markdown comes within weeks of two other funds Fidelity Rutland Square Trust II, a mutual fund managed by Fidelity Investments and Valic Co., marking down their stakes in Flipkart by 20%. Valic and Fidelity had picked up shares in Flipkart as a part of its series D round of funding in 2013, when Flipkart had raised $360 Mn in two tranches. Incidentally, this was the second markdown from both the mutual funds. Earlier, Fidelity and Valic Co. had marked down their holdings in the company by 24% and 12% respectively in the previous quarter.
This markdown pegged Flipkart’s valuation up to $10.7 Bn as compared to $15.2 Bn when it last raised capital in July 2015. This markdown was preceded by another of its investor -US-based mutual fund managed by T.Rowe Price –marking down its shares in the ecommerce giant by 15%.
While Fidelity and Valic hold very small amounts of Flipkart stock, with their holdings together worth less than $6 Mn, but when put in perspective with markdowns by Morgan Stanley and T Rowe Price, both of which together own hundreds of millions of dollars’ worth of Flipkart stock, it seems to suggest that investors believe that the company is significantly overvalued. Whether it is merely the on-going effect of the slowdown in funding in Indian and global startups is something the coming months will throw light on. As of now however, its widely swaying valuation has halted at the $9.39 Bn figure, almost a 38% drop from its all-time high of $15.2 Bn.
The ecommerce giant is amidst a restructuring rejig, with co-founder Binny Bansal taking charge as CEO, cutting costs by shedding jobs, improving efficiency, focussing on improving loyalty among customers. In its latest bid to crunch costs, it has also deferred joining dates for graduates from management institutes, which has put it at loggerheads with the prestigious Indian Institutes of Management (IIMs).
This month, HSBC’s brokerage arm slashed down the paper valuation of restaurant-discovery platform Zomato by 50% to $500 Mn from the earlier valued $1 Bn. This is about half the valuation at which the restaurant search firm raised its last round of funding in September.
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