Meesho shares slide 8% in 2 days. What’s behind the selloff after stock more than doubled from listing?

Shares of e-commerce platform Meesho fell 8% over two trading sessions, slipping to Rs 216.75 on Monday after a dizzying post-listing rally that more than doubled the stock’s IPO price in just over a week. Investors are now grappling with the stock’s sudden pullback following intense early demand, short-covering pressures, and a limited supply of shares in the market.

Meesho made a striking market debut, listing at Rs 162, a 46% premium over its Rs 111 IPO price, and closing its first session near Rs 170. The three-day IPO, sized at over Rs 5,000 crore, attracted overwhelming demand, being subscribed 79 times overall, with retail investors alone contributing to a 19-fold subscription.

In the last seven trading sessions, the stock surged nearly 110% over its issue price. This sharp rally triggered a short squeeze, forcing more than one crore shares into the exchange auction mechanism after several short sellers failed to deliver stock for settlement. Meesho’s free-float of roughly 6% has magnified price swings.


IPOs with low free-float have increasingly shown sharp price swings. A similar situation occurred last month with Groww, where an 89% surge in the stock, combined with limited supply, pushed 30 lakh shares into auction. Since its listing, Meesho’s rally has created over Rs 50,000 crore in investor wealth.

Brokerage views

Global brokerage UBS initiated coverage on Meesho with a 'Buy' rating and a target price of Rs 220. UBS highlighted the company’s asset-light model, negative working capital cycle, and consistent cash flow generation as key positives.

The brokerage predicts a robust 30% compound annual growth in Net Merchandise Value (NMV) over FY25–30E, driven by a sharp expansion in annual transacting users—from 199 million to 518 million—and an increase in ordering frequency, even as average order values moderate from Rs 274 to Rs 233.

Choice Institutional Equities also endorsed the stock, stating that “Meesho is best placed to monetise this shift via its zero-commission, low-AOV, discovery-led platform serving Tier-2/3 users. Long-tail depth, content-led demand and logistics integration enable superior unit economics, with rising ad/fintech/fulfilment monetisation makes Meesho the most leveraged play on the next 100–150Mn mass-market users.”

The brokerage set a target price of Rs 200, implying an 80% upside from the IPO price.

While the recent pullback has tempered some investor enthusiasm, expert said the long-term growth narrative remains intact, supported by strong demand, high engagement among Tier-2 and Tier-3 users, and positive analyst coverage.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)