The world had watched as Indian startups had hit astonishing valuations over the last few years. Eight Indian startups had become unicorns, with valuations exceeding $1 billion. The flagbearer of this movement was Flipkart, the poster boy of the Indian startup industry, which had notched up a valuation of $15 billion.
But skeptics had maintained that this rise was too fast, too quickly. Murmurs had arisen about how these companies were being valued at far greater than their economics would suggest, and venture capital exuberance was causing the Indian market to overheat. But now there’s definitive proof that the skeptics had been right – for the first time in its history, Flipkart’s valuation has been devalued. According to Morgan Stanley, Flipkart is now worth only $11.1 billion – a full 27% below its valuation of $15.2 billion at which it had raised money last year.
In a regulatory filing with the SEC, Morgan Stanley valued its Flipkart stake at $58.93 million (Rs 405.03 crore) in December 2015, as compared to $80.62 million (Rs 567.84 crore) in June 2015.
And critics have been quick to pounce – longtime Flipkart skeptic Mahesh Murthy warned of “more bloodshed.”
After 8-year discounting spree @Flipkart itself discounted by Rs27,000 crores: Morgan Stanley cuts valuation $15bn -> $11bn
— Mahesh Murthy (@maheshmurthy) February 27, 2016
Flipkart is undergoing a management reshuffle as longterm CEO Sachin Bansal stepped aside to make way for his cofounder Binny Bansal. Several longterm executives, including Mukesh Bansal and Ankit Nagori have quit the company to start their own ventures. Yesterday, Flipkart had shut down its grocery app, Nearby, citing low demand from consumers.