Flipkart has had a very tough 2016 and had received a major shock when its founder was eased out of the CEO’s role recently, by an investor’s pick. Its cycle of bad news continues as its valuation was downgraded by an investor by a whopping 4% to $9.9 billion.
Flipkart has been facing tough competition from American Multi National Corporation and giant Amazon in the e-commerce space. Amazon is now recording a larger revenue growth and has a revenue larger than that of Flipkart. Amazon has been in India for a much shorter amount of time than Flipkart and has still managed to steal a march on Flipkart. Amazon also has a lot of cash as compared to Flipkart. Amazon USA, has pledged to invest $5 billion into its Indian unit and this is something that Flipkart may not be able to manage.
Flipkart’s investor T.Rowe Price, a mutual fund investor had invested a $100 million in Flipkart in December 2014, when it raised $700 million in funding. They had marked down their investment by 15% in April 2016 and this would be the second time that they have devalued their shares, by 4%. This brings the price per share of Flipkart to $93.15, down from $96.29.
Morgan and Stanley had marked down their investment in Flipkart by 38.2% in November 2016, but people in the know said that their assessment did not matter in this case as they owned stock only worth approximately $100,000.