Zomato Shares To Plummet

What Caused Zomato Shares To Plummet Today?

Today, Zomato’s one-year lock-in for 78 percent of its paid-up capital ends. The share price of Zomato is under heavy sell-off pressure.

During the early morning deals today, the Zomato share price tumbled by over 11 percent as the company’s one-year lock-in period, which was for promoters, shareholders, employees, and others, comes to an end.

It is estimated that Zomato’s total paid-up capital over the next year’s overhang will be around 78 percent, and investors had been expecting Zomato shares to be subject to sell-off pressure during this week.

What Caused Zomato Shares To Plummet Today?

On 23rd July 2021, the public offering of Zomato Limited was listed on both the BSE and the NSE.

On Monday, Zomato shares opened negatively in early morning trade on Monday and went on to breach their lifetime low of *50.05 apiece. Later, within a few minutes of the opening bell on the stock exchange, they made another record low of *47.50.

Zomato shares have been under selling pressure today in the early morning session due to the fact that the shares of Zomato were listed on Indian bourses on 23rd July 2021, which means one year lock-in period has ended for the promoters, employees, founders, and other shareholders of the company.

Considering that these shareholders constitute around 78% of the company’s total paid-up capital, the shares of this food service company have been under sell-off pressure in the early morning session today.”

Zomato’s shares were listed on BSE and NSE for the first time on 23rd July 2021 at a premium of more than 51 percent over its previous listing price.

As a result of its bumper listing in November 2021, Zomato shares were able to achieve their lifetime high of 169 per share levels during its post-listing rally, which breached a trillion dollar market valuation during its post-listing rally.

A few months ago, the stock was offered at 76 per equity share in the primary markets, and the price was expected to remain the favorite of bears looking to sell on rising in the short to medium term.

As a result, when the one-year lock-in period for Zomato shareholders expires, those holders, who make up 78 percent of Zomato’s total paid-up capital, will look to exit the stock on every bounce in the stock price, especially when it rises around its offer price of $76 apiece,” said Avinash Gorakshkar, head of research at Profitmart Securities.

After climbing to its lifetime high, the shares of Zomato have been under heavy sell-off pressure for the last few sessions since the company’s stock has started making new 52-week lows since it climbed to its lifetime high.