Lately, a lot of things have been happening around Zomato. Huge investors are selling their stake in the company, the stock price had plunged to new lows, and the recent and exciting news is that Zomato seems to rebrand itself as Eternal.
After the rebranding news came out, the stock skyrocketed within minutes. After all of these incidents, it seems that Zomato is on a roller coaster ride.
Today, let’s find out what’s going on with Zomato.
What’s Happening?
Ever since its inception, the Zomato app has been everyone’s favourite. We quickly scroll through Zomato to find the best deals whenever we crave food.
But even after being the most preferred food delivery platform, Zomato is a loss-making company.
Not just that, since listing, the share price of Zomato has eroded investors’ wealth by 77% as of 10th August 2022.
On the 26th of July, the stock price dipped to an all-time low of Rs 41.65. Many huge investors of Zomato sold their stakes around the same time.
- Uber Technologies sold its entire stake of 7.78% for Rs 3,100 crore.
- Moore Strategic Ventures sold its entire holding of Rs 4.25 crore shares at Rs 44 per share. The trade size was Rs 187 crore which was bought for Rs 191 crore before Zomato got listed.
- The investment giant Tiger Global reduced its stake in the company by almost half to 2.77% by selling over 18.45 crore shares.
This selling pressure pushed the share price further down.
Then came the news that Zomato is aiming to form an umbrella organisational structure by coming up with a parental company named ‘Eternal’.
Why is Zomato trying to opt for this new look?
In the past, we have seen many companies rebrand themselves for a better motive. For example, Facebook rebranded itself to Meta, which showed its firm faith in the future of Metaverse. Apple inc, which previously was called Apple Computers, dropped the term ‘Computers’ once they launched the iPod music player. So, rebranding is done to make an identity similar to the work a company performs. By doing so, the brand becomes relevant to the customers.
Acquisitions Done by Zomato
Zomato is a company which constantly keeps acquiring new and potential start-ups. It has made various acquisitions to date.
- It acquired the grocery delivery start-up, Blinkit for $570 million.
- Zomato backed an e-commerce logistics platform, Shiprocket, for $185 million.
- It has acquired a 6.4% stake in Curefit Healthcare Ltd for $145 million.
- It has also acquired a 19.84% stake in ad tech company AdOnMo.
And the list goes on…
What’s Next?
The food delivery space has become quite competitive. It has become a space where customers are no longer loyal to one platform. If a competitor is offering a better discount, we quickly tend to order from the competitor’s platform without even thinking twice.
And as Zomato has been in losses for a long time, they have also cut down on offering discounts. For example, they had decreased offering discounts from Rs 21.7 to Rs 7.3 in 9MFY21.
Now, it seems that Zomato wants to become more than just a food delivery chain, and Eternal could be the first step towards it.
After all, eternal means boundless, timeless, and permanent, and the term explains it all!
It will be interesting to see what happens next!
That’s it for today.
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*The stocks mentioned in the article are for informational purposes. This is not investment advice.
