Investors remain cautious despite Meesho’s profitability claims

Sometimes, the numbers you don’t reveal say more than the ones you do.

Earlier this month, Meesho announced that it was the first horizontal ecommerce company in India to turn profitable.

This announcement made headlines as two of its larger rivals, Amazon India and Flipkart, have yet to break even despite being in operation for far longer than Meesho has.

However, a closer look reveals that this was a profit of under 10 crore rupees or between US$120,000 and US$1.1 million.

“Even at the upper end, that’s still just 9 crore rupees (US$1.1 million), less than 1% of its average monthly sales,” says an investor whose firm backs Meesho but does not manage the portfolio holding its shares.

More worrying is the firm not revealing its top line. “The company hasn’t given its most recent sales numbers for May, June, and July – even to investors,” the person tells Tech in Asia, requesting anonymity.

Photo credit: T. Schneider / Shutterstock

It is common practice for ecommerce players, including Meesho, to reveal their monthly sales figures to investors. Suspicions are aroused when the numbers are not forthcoming.

Downward trend in sales?

Meesho, which was founded in 2015 by Vidit Aatrey and Sanjeev Barnwal, is seeing a decline in sales after it cut advertising spend, according to its investors. It has not shared specific figures with investors that would help them make a year-on-year or month-on-month comparison.

Among the few available numbers are its monthly gross sales, which stood at US$350 million in February 2023. This represented a 10% decline from US$383 million in April 2022, reported The Arc, citing sources.

Information on which period the profit figure it recently posted covers – whether it’s for the month of July or for the months spanning April to July – is also unclear. Meesho has not responded to a request for comment.

In 2022, the company was the third largest and fastest-growing ecommerce firm in India, according to a note by investment research firm Jefferies that was published in April 2023.

That year, Meesho achieved US$4.5 billion in terms of gross merchandise value (GMV), said Jefferies. It added that “in comparison, Flipkart and Amazon had US$23 billion and US$17 billion in GMV, respectively.”

However, a more recent note by research firm Bernstein shows that as of April 2023, Reliance Retail has caught up with a GMV of US$5.7 billion compared to Meesho’s US$5 billion.

All flash, no fire?

Meesho urgently needs to raise