Meesho shares crash 10% today: What's behind the slump?
What's the story
Meesho, a popular e-commerce platform, has witnessed a 10% decline in its share price today. The stock fell to ₹201.68 on Monday after a stellar post-listing rally that had more than doubled the IPO price in just over a week. Investors are now trying to understand this sudden pullback after the initial surge of demand and short-covering pressures.
Market entry
Meesho's market debut and IPO performance
Meesho made a sensational debut on the stock market, listing at ₹162, a 46% premium over its IPO price of ₹111. The three-day IPO issue size of over ₹5,000 crore was subscribed 79 times overall with retail investors subscribing 19 times. In the last seven trading sessions alone, the stock has gained nearly 110% over its issue price.
Market dynamics
Short squeeze and auction mechanism
The sharp rally in Meesho's stock price triggered a short squeeze, resulting in over one crore shares being put into the exchange auction mechanism. This was after several short sellers were unable to deliver stock for settlement. The company's free-float of around 6% has further amplified these price movements.
Analyst ratings
Global brokerage firms initiate coverage on Meesho
Global brokerage UBS has initiated coverage on Meesho with a 'Buy' rating and a target price of ₹220. UBS noted the company's asset-light model, negative working capital cycle, and consistent cash flow generation as major positives. Choice Institutional Equities also backed the stock saying "Meesho is best placed to monetize this shift via its zero-commission, low-AOV discovery-led platform serving Tier-2/3 users."