Meesho Stock Drops 10%: What Investors Should Know

The shares of Meesho, a recently listed e-commerce platform, have dropped 10% to hit the lower circuit at Rs 201.68 apiece. This comes after the stock saw a significant surge earlier in the month, jumping up to 65% during a four-session gaining streak.

What's Behind the Fall?

The recent fall in the stock may have been driven by profit booking, as investors who bought the stock at lower prices are now selling to make a profit. According to experts, the current price of the stock after the sharp rally makes the near-term risk-reward unattractive.

Expert Insights

Abhinav Tiwari, Research Analyst at Bonanza, says that Meesho is a strong long-term business, but the current price makes it unattractive in the near term. He notes that the company's growth story is convincing, but buying shares at such elevated levels won't fully account for execution risks and the fact that losses are still present.

• Meesho's fundamentals are improving steadily, but valuation is the key risk.
• The strong IPO subscription and sharp post-listing rise suggest optimism may have run ahead of fundamentals.
• Waiting for a more attractive price could offer a better risk-reward.

Investor Focus

Harshal Dasani, Business Head at INVasset PMS, says that the focus should shift from headline growth to delivery. He explains that questions like how effectively Meesho converts scale into sustainable profitability will ultimately determine whether the post-IPO re-rating holds or normalizes over time.

Key Takeaways:

• Meesho's stock has jumped around 82% from its IPO price and 24% from its listing price.
• The company is still transitioning towards consistent profitability.
• Institutional participation post-listing lends credibility, but sustaining these levels will require tangible progress on unit economics, operating leverage, and competitive intensity management.

Remember, this is perspective, not prediction. Do your own research and consider your own risk tolerance before making any investment decisions.