During its stock market debut on Thursday, Paytm, an Indian digital payments startup managed by One97 Communications Ltd, suffered a dramatic drop in shares.
This comes less than a week after the country's largest-ever IPO. On the first day, the shares dropped as much as 26% from their issue price.
Paytm's plunge on its first day of trade made investors question the company's lack of profits and the steep valuations it gained in the country's biggest-ever IPO.
In afternoon trade, shares were trading at 1,614 rupees, down from the offer price of 2,150 rupees, valuing the company at about $14.2 billion.
While there were some concerns that Paytm's stock market debut would be underwhelming, the sharp drop on Thursday was astounding.
A drop to 1,560 rupees, which represents a 20% retreat from the outset, would activate the exchange's circuit breaker, halting trading for the day.
Founder and Chief Executive Officer Vijay Shekhar Sharma, who was clearly emotional during the opening ceremony, later told Reuters that he was unconcerned by the slide and that he did not regret listing in India.
"One day does not determine our destiny," he remarked. "It's a novel business model, and it requires a lot of effort to comprehend it plainly... we have a lot to offer the markets and market participants."
Paytm, which is backed by China's Ant Group and Japan's SoftBank, grew quickly after Uber listed it as a quick payment option in India, and has since expanded into a wide range of services, including insurance and gold sales, cinema and flight ticketing, bank deposits, and remittances.
A source familiar with the subject told Reuters in July that Paytm aims to break even by late next year or early 2023, despite the fact that the business declared in its prospectus that it anticipated to lose money for the foreseeable future.
On Thursday, investors and experts looked to be losing faith.
"Paytm's financials aren't very outstanding, and the business's growth possibilities are limited," said Shifara Samsudeen, a LightStream Research analyst who writes for Smartkarma.
"Clearly, the company lacks a clear route to profitability," Samsudeen said.
The company lost 3.82 billion rupees ($51.5 million) in the quarter ended in June, compared to 2.84 billion rupees in the same period the previous year.
Even though Paytm's $2.5 billion offering was placed at the top of the suggested range, demand was lower than other recent stock sales, owing to Paytm's market share loss to Google and Flipkart's PhonePe.
