A mutual fund of the global brokerage firm Morgan Stanley has marked down its stake in the Indian e-commerce behemoth Flipkart by 27 percent. The mutual fund, called the Institutional Fund Trust Mid Cap Growth Portfolio, marked its stake in Flipkart at $103.97 per share.
It is 27% less than the last funding round by Flipkart and saw a significant decline when compared to $142.24 per share as of June 2015 and $117.96 per share as of December 2014.
Importantly, the markdown comes just a week after Flipkart’s claimed that it’s valued $15.2 billion. The fall in share reduces Flipkart’s valuation to $11 billion. Flipkart is not the only tech startup though, in which the fund has cut down its stake. Many other top Silicon valley tech-startups continue to face the heat of decreasing investor sentiment in tech startups.
Lowering valuation of Flipkart hasn’t come as a shocker to industry observers. Market observers have been anticipating correction in valuation of privately held Internet companies.
American software and services company Palantir Technologies for example, which is valued at over $20 billion also saw its stakes coming down by 32% from $11.38 per share to just $7.70 per share. The fund also marked down its stake in popular file hosting service Dropbox by 25%.
Interestingly, Flipkart’s rival Snapdeal witnessed a 30 per cent upward swing in its valuation when it raised $200 million recently. The Gurgaon-headquartered company is reportedly valued in the range of $6.5-$7 billion. The valuation of ShopClues also jumped significantly and it became the fourth Unicorn in the fledgling e-commerce market.
After that funding galore in the initial years, things in the investment domain have started to slow down from past few years — specially Q4’15. Investors are now looking for a sustainable business model and profitability rather than just initial disruption through technology.
Few financial experts opine that investors in Flipkart, Snapdeal and others would look to exit from these companies in the course of next two to three years