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Morgan Stanley Marks Down Flipkart Shares For Fourth Time Consecutively – Valuation Takes 38% Dive

Morgan Stanley Marks Down Flipkart Shares For Fourth Time Consecutively – Valuation Takes 38% Dive

Flipkart’s valuation took another beating as a mutual fund managed by Morgan Stanley slashed the value of its Flipkart shares by 38.2%. The recent markdown pegged its valuation at $5.54 Bn.

According to an ET report, Morgan Stanley, as of September 2016, has marked the value of its Flipkart shares at $52.13 per share, as compared to $84.29 per share in June 2016.

This pegs Flipkart’s valuation at $5.54 Bn, compared to $9 Bn in the previous quarter and $15.2 Bn when it last raised capital in July 2015.

Morgan Stanley’s fund had first invested in the ecommerce marketplace when it raised $160 Mn in October 2013. The decrease in valuation showdown for the ecommerce giant began in February 2016, when Morgan Stanley marked down Flipkart shares by 27%.

Later in May 2016, for the second time in a row in a successive quarter, Morgan Stanley Mutual Fund Trust, lowered the value of its shares in Flipkart by 15.5%. It pegged Flipkart valuation at $9.39 Bn.

This is the fourth consecutive markdown by Morgan Stanley in last nine months. Prior to this, Flipkart witnessed a series of markdowns from other mutual fund investors like T Rowe Price, Fidelity, and Valic over the past year. In April 2016, a US-based mutual fund managed by T.Rowe Price marked down its shares in by 15%. T Rowe Price had invested about $100 Mn in Flipkart in December 2014, when the firm raised $700 Mn funding.

Earlier this month it was reported that Valic and Fidelity too have marked down Flipkart shares. Valic marked down the valuation of Flipkart shares from $108.04 (May end quarter) to $95.84(August end quarter), a decrease of 11.3%. On the other hand, Fidelity has marked down the valuation of its Flipkart shares from $84.29 per share assigned to them at the end of May to $81.55 per share for the August-ended quarter.

Fidelity and Valic hold small amounts of Flipkart stock, with their holdings together worth less than $6 Mn. But the markdowns by Morgan Stanley and T-Rowe Price, that together hold hundreds of millions of dollars’ worth of Flipkart stock, it seems that investors believe that the company is significantly overvalued.

As of now Flipkart’s valuation has halted at $5.54 Bn, almost a 63.5% drop from its all-time high of $15.2 Bn.

Earlier this month Softbank Group Corp also marked down close to $555 Mn in two of its Indian investments, cab hailing firm Ola and ecommerce marketplace Snapdeal, as per its six monthly earnings report, ending September 2016.

Author

Aparna Mishra

Inc42 Staff

After a 2-year-stint at Ernst & Young, Aparna moved to Journalism. Her prior experience enables her to understand business management. An avid reader and a traveller she hopes to gain insights on the startup ecosystem at Inc42.

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