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Meesho Stock Plummets After IPO Frenzy
23 Dec
Summary
- Meesho shares dropped 8% over two sessions after a 100% surge.
- Low free-float and short-covering amplified price swings.
- Analysts maintain strong support with 'Buy' ratings.
Meesho shares have seen a significant correction, falling 8% over two trading sessions to Rs 216.75. This pullback follows a remarkable surge of over 100% since its IPO on December 10, where the stock more than doubled its initial price. The volatility is attributed to a combination of factors, including a low free-float of around 6%, which amplifies price swings, and significant short-covering activity that forced over one crore shares into auction.
Despite the recent downturn, analysts remain largely optimistic. Global brokerage UBS initiated coverage with a 'Buy' rating and a target price of Rs 220, citing Meesho's asset-light model and consistent cash flow. UBS projects robust Net Merchandise Value growth, driven by expanding user numbers and increased ordering frequency. Choice Institutional Equities also endorsed the stock, setting a target price of Rs 200.
The long-term growth narrative for Meesho appears intact, supported by strong demand and high engagement from users in Tier-2 and Tier-3 cities. While the immediate price action has been turbulent, the underlying business fundamentals and positive analyst sentiment suggest continued investor interest in the e-commerce platform's future prospects.
