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Tuesday, April 16, 2024

The value of Flipkart drops by $5 billion. Understand why


<p>According to stock transactions carried out by Flipkart’s US parent firm, Walmart, the business’s worth suffered a blow, falling by $5 billion (about Rs 41,000 crore) between January 2022 and January 2024.</p>
<p>During this time, Flipkart’s value has fallen from $40 billion to $35 billion.</p>
<p><img decoding=”async” class=”alignnone wp-image-522955″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-the-value-of-flipkart-drops-by-5-billion-understand-why-the-devaluation-is-attribu.jpg” alt=”theindiaprint.com the value of flipkart drops by 5 billion understand why the devaluation is attribu” width=”1035″ height=”583″ title=”The value of Flipkart drops by $5 billion. Understand why 27″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-the-value-of-flipkart-drops-by-5-billion-understand-why-the-devaluation-is-attribu.jpg 690w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-the-value-of-flipkart-drops-by-5-billion-understand-why-the-devaluation-is-attribu-390×220.jpg 390w” sizes=”(max-width: 1035px) 100vw, 1035px” /></p>
<p>The main cause of this downturn is the split between Flipkart and fintech company PhonePe, which is currently functioning as a separate business.</p>
<p>In spite of this loss, current projections place Flipkart’s worth in the $38–40 billion region. In the fiscal year 2022, Walmart lowered its stock share in Flipkart by 8%, or $3.2 billion, lowering the company’s valuation to $40 billion.</p>
<p>But by spending $3.5 billion in Flipkart during the fiscal year 2024, Walmart was able to raise its shareholding by 10% and ultimately reach around 85%. Walmart took this action as part of their strategy to strengthen their position in the Indian e-commerce business.</p>
<p>Flipkart, on the other hand, disputes Walmart’s stated value fall, arguing that it represents a fair adjustment in light of PhonePe’s 2023 split.</p>
<p>Flipkart, on the other hand, disputes Walmart’s assessment of the value decline and believes it is a reasonable adjustment given PhonePe’s 2023 separation.</p>
<p>“This reading is not accurate. News agency PTI cited a Flipkart representative as stating, “The PhonePe separation was completed in 2023, which saw an appropriate adjustment in Flipkart’s valuation.”</p>
<p>It is said by insiders that Flipkart’s intrinsic worth has not changed despite the reported fall. Following the split, PhonePe’s value increased to about $12 billion after raising $850 million from investors.</p>
<p>Additionally, Flipkart’s gross merchandise value (GMV) increased significantly year over year in 2023—by around 25 to 28 percent—which is thought to have had a beneficial effect on the company’s present value.</p>
<p>It’s important to remember, however, that Flipkart hasn’t had a formal valuation process since 2021. In FY23, the business reported a consolidated net total revenue of Rs 56,012.8 crore, a net loss of Rs 4,846 crore, and total costs of Rs 60,858 crore.</p>


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