Market cap of tech companies sees steep fall since listing

The combined market capitalisation of the 50 largest tech initial public offerings (IPO) in the US since 2020 is down by nearly 59% as compared to the day they listed on the bourses, per data by market research firm CB Insights. In a report, CB Insights said the total combined market cap of the US IPOs on the day of listing was $1.086 trillion, which fell to $443.6 billion as of March 23, 2023.

This trend is not driven by a handful of companies. Data showed that of the top 20 tech IPOs in the US since 2020, 90% (18 of 20) currently trade lower than their IPO valuation, that too by a significant margin.

It is not any different for Indian new-age tech startups. They, too, saw a significant erosion in their market capitalisation since going public over the last two years.

Paytm parent One 97 Communications has seen the biggest drop as its mcap has fallen nearly 70% from Rs 1.4 lakh crore to Rs 41,982 crore. Other prominent tech firms such as Nykaa and Zomato faced a similar rout as their mcap plummeted to Rs 35,385 crore and Rs 53,290 crore, respectively.

Major private equity and venture capital funds that held stakes in these new-age firms have taken the exit route in recent months. For instance, Sequoia Capital India, an early backer of Zomato, sold a 2% stake in the online food ordering platform through the open market route in August last year. Chinese multinational Alibaba sold its entire stake in Paytm in a block deal earlier this year. And Tiger Global and SoftBank have been selling their shares in companies like Zomato, Delhivery and Paytm.