This week Reuters has reported that Snapdeal, the Indian online retail giant, is shelving plans for their initial public offering (IPO) due to the rec
This week Reuters has reported that Snapdeal, the Indian online retail giant, is shelving plans for their initial public offering (IPO) due to the recent technology stock rout. In the wake of this, speculation is rising that Snapdeal has chosen to focus on more stable assets rather than the uncertain volatility of the stock market.
It comes as the company had been in talks with Goldman Sachs and Morgan Stanley to potentially produce a spinoff by helping the company file for a multi-billion dollar IPO. This would have been the largest Indian tech offering since 2011 and Snapdeal, who are backed by Japan’s SoftBank, had planned to look to raise $152 million to finance its long-term goals.
However, this ambition has been cut short due to the recent turmoil in the stock market. Asian tech stocks have begun to drop in value, with investors intensifying their scrutiny and many stocks decreasing to their lowest point in the last two years. This has made investors less willing to throw their money into tech stocks as the returns are perceived to be too low to make it worth the risk.
Given the current market instability, and the fear that the IPO may not be a worthwhile investment, Snapdeal have chosen to be prudent and have decided to shelve their IPO for the time being. Despite the announcement, SoftBank remain committed to the company’s long term objectives and are continuing to have talks with potential investors.
It is not yet known when Snapdeal may re-emerge with a potential IPO, but the decision not to pursue their plans could be a shrewd one. Rather than risking their money in uncertain markets, they may well choose to look to stable places during this period of tech stock unrest.
Reuters Reveals India’s Snapdeal to Shelve $152 Million IPO Amid Tech Stocks Rout
Snapdeal’s Plans to List on the NYSE Put on Hold Due to Market Turbulence
Reuters reported earlier this week that Indian e-commerce giant, Snapdeal, has put its planned initial public offering (IPO) in New York on hold due to the market turbulence experienced by the broader technology sector lately. The significant $152 million IPO has been shelved as the tech stocks rout continues, leaving investors uncertain and investors risk-averse when it comes to tech investment.
Snapdeal Has Seen Steep Revenue Drop
Snapdeal revealed that its revenue had dropped to $203.20 million in the fiscal year 2017, a sharp decrease from the $590 million revenue it reported in 2016. This steep drop in revenue was largely attributed to increased competition from larger rivals such as India’s Flipkart and Amazon India. As a result, the company has shifted its focus from selling to providing a more customer-oriented platform experience, resulting in additional investments in technology and improvements in user experience.
Snapdeal Looking To Reassure Investors
On the other hand, Snapdeal has been trying to reassure investors with the announcement of a $1 billion investment round from Japanese conglomerate Softbank. Despite this, the tech slump has made investors more skeptical and risk-averse when it comes to investing in tech companies. This in turn caused Snapdeal to put its IPO on hold until the turbulence in the tech sector eventually subsides.
Snapdeal Needs to Improve its Financials
The company still needs to improve its financials before they can make a successful listing, so they need to ensure that there is sufficient investor interest in the IPO in order to gain success. Moreover, Snapdeal also needs to consider other measures such as cutting costs, improving efficiency, and sharpening its focus in order to help turn the company’s fortunes around before it can finally launch its IPO.
It looks like Snapdeal will have to put its plans to list on the NYSE on hold due to the current market turbulence caused by the tech stocks rout. To make its listing a success, Snapdeal needs to take the necessary steps to improve its financials and gain more investor interest before it decides to go ahead with its IPO.