India's Paytm falls over 10% to record low after lockout period expires

Paytm shares fell more than 10 percent on Tuesday to an all-time low of 476 Indian rupees ($5.8), before recovering slightly after the end of a lock-up period for early backers of the Indian financial services firm last week .

The lock-up period for the company’s earlier backers expired on November 15, freeing up significant investors such as SoftBank Group and Alibaba to sell their shares. Last week, SoftBank sold more than $200 million worth of stock. (Indian law requires pre-IPO investors to hold post-IPO shares for up to one year from the IPO.)

At INR 476, Paytm shares are down more than 77% from their IPO price of 2,150 ($26.3). The company that was valued at $16 billion in a private round in 2016, currently has a market cap of $3.8 billion. Paytm has raised more than $6 billion through private rounds and IPOs (including secondary transactions).

Technology firms have lost significant value this year as the market bears down and reverses much of the gains from the previous 13-year bull run. Paytm is among a number of Indian startups that went public last year. Zomato, PolicyBazaar, Nykaa and Delhivery — some of the other startups that went public in the last two years — are all trading well below their IPO prices.

Vijay Shekhar Sharma, the founder of Paytm, assured investors last week that the firm was working “on the right path to profitability and free cash flows”. He added: “Our journey to build a scalable and profitable financial services business has just begun.”

The erosion of Paytm’s stock may also have an indirect effect on India’s broader fintech startup ecosystem. Paytm rival PhonePe is trying to win a round from General Atlantic and Walmart in the a valuation of $12 billionaccording to MoneyControl.

Sharma said the company is working for Paytm to reach $1 billion in annual revenue by the end of this fiscal year in March.

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