Paytm, its shares took another nosedive, plunging by a staggering 20 percent for the second consecutive day. This ongoing freefall comes hot on the heels of a regulatory bombshell dropped by India’s central bank, effectively putting a spanner in much of Paytm’s operations.
The Reserve Bank of India, not one to mince words, ordered Paytm Payments Bank Ltd. to halt many of its activities, citing a laundry list of persistent non-compliance and supervisory concerns. A post-market conference call aimed at calming jittery investors ended up about as effective as a paper umbrella in a monsoon. To add insult to injury, heavyweight brokerages like JPMorgan Chase & Co. and Citigroup Inc. decided to downgrade Paytm’s stock to the dreaded ‘sell’ category.
This two-day stock market rollercoaster has not been kind to Paytm, wiping a cool $2 billion off its market value. And who’s feeling the pinch? Well, among others, the likes of Alibaba’s Antfin Singapore Holding Pte. and SoftBank Group Corp., who must be eyeing their investment nervously over morning coffee.
Analysts at JPMorgan, never ones to sugarcoat, laid it out bluntly in a note, highlighting how the RBI’s order hits Paytm’s bread and butter – its payments business – right where it hurts. With that sector accounting for a chunky 59 percent of revenue, it’s like someone swiped their dessert before they could even take a bite.
As if that weren’t enough, Paytm’s stock has now taken a tumble of a whopping 77 percent from its glitzy IPO back in 2021. Talk about a market bungee jump gone wrong! But fear not, for Paytm’s recent conference call promised that operations would be back to “fully normal” come early March. Cue the optimistic music, but let’s see if they can really pull a rabbit out of the hat this time.
In a bid to salvage what’s left of their reputation, Paytm is fast-tracking plans to cozy up to other banks. It’s like they’re speed-dating in the finance world – hoping to find a new partner before the music stops.
So, as the dust settles and Paytm tries to pick up the pieces, one thing’s for sure: it’s been one heck of a ride. And who knows what surprises tomorrow’s stock market will bring?