Zomato is in BIG trouble!
Yesterday, Uber sold its entire stake in Zomato worth Rs.3120 crores
Is this the end of Zomato?
Let's find out in the thread🧵
Yesterday, Uber sold its entire stake in Zomato worth Rs.3120 crores
Is this the end of Zomato?
Let's find out in the thread🧵
First of all why was Uber even invested in Zomato?
When Uber Eats sold off its India business to Zomato in 2020, they got Zomato stock in return.
That stake was worth just over Rs. 3000 crores as of yesterday.
When Uber Eats sold off its India business to Zomato in 2020, they got Zomato stock in return.
That stake was worth just over Rs. 3000 crores as of yesterday.
But why did they sell?
— Uber made huge losses in Zomato and it has been holding the stake for far too long
— Plus with recession knocking at the door, some bucks coming back (even at a loss) won’t hurt them at all
— Uber made huge losses in Zomato and it has been holding the stake for far too long
— Plus with recession knocking at the door, some bucks coming back (even at a loss) won’t hurt them at all
Who bought the stake?
The list of buyers included around
20 global and Indian funds.
Which includes big players like:
• Fidelity
• Franklin Templeton
• ICICI Prudential Life Insurance
The list of buyers included around
20 global and Indian funds.
Which includes big players like:
• Fidelity
• Franklin Templeton
• ICICI Prudential Life Insurance
Is there some problem with the fundamental performance of Zomato this quarter?
Investors whose lock-in ended might be selling, but Zomato’s quarter 1 results show real HOPE!
Their losses have halved and their revenue has increased by 67.4%🟢
Investors whose lock-in ended might be selling, but Zomato’s quarter 1 results show real HOPE!
Their losses have halved and their revenue has increased by 67.4%🟢
You all know that the food delivery business in India is a duopoly between Zomato and Swiggy.
But Zomato might be cutting down on its cash burn.
Since it’s a public listed company, it’s looking at profitability.
In fact, their food delivery business has broken-even in Q1
But Zomato might be cutting down on its cash burn.
Since it’s a public listed company, it’s looking at profitability.
In fact, their food delivery business has broken-even in Q1
Their EBITDA loss was at 80 crores which has come down to 0 in this quarter.
That means— they made no loss before interest, taxes, depreciation and amortisation for the first time!
To cut the clutter: this means their food delivery business in on the path to profitability.
That means— they made no loss before interest, taxes, depreciation and amortisation for the first time!
To cut the clutter: this means their food delivery business in on the path to profitability.
BUT….their other businesses which include hyperpure are still making losses.
Is it sustainable?
It might be.
But we don’t know for sure.
Zomato is quite firm on its stance that its trying to go towards profitability—and they don’t see why they can’t grow at a healthy pace while being profitable.
It might be.
But we don’t know for sure.
Zomato is quite firm on its stance that its trying to go towards profitability—and they don’t see why they can’t grow at a healthy pace while being profitable.
The management is saying that the whole business will breakeven by 2023.
But experts still say that this might take a long time.
But experts still say that this might take a long time.
And finally— is it over for Zomato now?
Far from it!
They will survive and thrive.
We think there’s a chance that Zomato can become profitable, but we’re not sure about the timeline.
Far from it!
They will survive and thrive.
We think there’s a chance that Zomato can become profitable, but we’re not sure about the timeline.
We also think they might be successful with growing at a decent pace once profitability is reached.
The reason is simple: Swiggy and Zomato have fortified their position in the market.
The reason is simple: Swiggy and Zomato have fortified their position in the market.
So, even if the market keeps bouncing between their courts, both these companies will be happy.
Now it will be about who can create more customer loyalty.
Since discounts won’t drive this market anymore.
Now it will be about who can create more customer loyalty.
Since discounts won’t drive this market anymore.
The market is completely between these 2 players. Soon both of them will try to get rid of incentives.
And once that happens whoever can provide better customer value with their main value proposition will have an edge in the market.
And once that happens whoever can provide better customer value with their main value proposition will have an edge in the market.
Who do you think will have the edge going forward—Zomato or Swiggy?
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