Everybody, relax. Here’s why Flipkart’s valuation markdown is not really a bad thing

Tech watchers across the world were jolted into sitting position (assuming they were settling in for a nice weekend) as a Morgan Stanley fund marked down its stock in India’s original unicorn, slashing off billions from the company’s valuation in a matter of minutes.

Depending on who you ask, this is either the beginning of the end, or simply a step towards the correction of a big bubble waiting to pop.

While the world debates the tech industry’s future, and what Morgan Stanley’s move means for the industry, it may be a good time to look at what this means for the Bangalore-based company itself, separate from the hoopla of the media headlines.

Flipkart is important to India’s – and by extension – Asia’s ecommerce industry simply by virtue of its size and growth potential. Even after Morgan Stanley cut its value by 27 percent, the company is at a whopping US$11 billion – which is still more than Dropbox.

First among equals

Photo credit: Wikimedia

Flipkart also kept its 45 percent market share lead (including Myntra) in 2015, according to a February 2016 report prepared by, surprise surprise, Morgan Stanley. Snapdeal (including Freecharge) was at 26 percent, while Amazon India was at 12 percent.

In this light, two things are clear. Firstly, the company has been going great guns in terms of growth. Secondly, even after taking into account that growth, it is still overvalued and needs some course correction. (The Morgan Stanley fund is separate from the research division, but come on. MS knows it’s the industry leader by large, and yet cuts it down 27 percent?)

Industry sources say Flipkart is finding it tougher to raise funds – to be fair, that is true of every startup – and that long time backer Tiger Global has decided to take a back seat, waiting for other investors to lead any further rounds.

Tiger Global said it had no comments.

Flipkart has reportedly talked to Alibaba, which backs rival Snapdeal.

Discounting the awkwardness of the arrangement, it is unlikely Alibaba will be OK to push in more money at current valuations, two sources familiar with the matter told Tech In Asia.

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