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News In Brief Business and Economy

Zomato falls 14%, wiping down investor wealth of Rs. 1,000 cr

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Zomato falls 14%, wiping down investor wealth of Rs. 1,000 cr
25 Jul 2022
7 min read

News Synopsis


In the first hour of trade today, shares of Zomato plunged 14%, instantly wiping out investor capital worth close to 1,000 crore. Leading meal delivery business Zomato is the only one that is publicly traded, unlike Swiggy, which is still not listed. Data gathered from the stock exchanges indicate that there was a significant amount of trading today as soon as the markets opened at 9:15 am. Over 10% of Zomato's shares fell throughout this period. Later, the selling volumes decreased, but the stock continued to fall. 

Because the investor lock-in period expired today, Zomato's shares fell. Since the initial public offering (IPO) in July 2021, up to 613 crore shares that were locked in can now be traded freely. The investor lock-in period for Zomato has previously come to an end. The company's shares also fell 8% in August of last year when the anchor investor lock-in period came to an end.

Since the promoter and employee lock-in period is now over, many of those owners have probably reduced their shares. In fact, according to market data, the Zomato stock saw volumes of 8.5 crore as of 10:00 a.m.

As implied by the name, a lock-in period is when shareholders are unable to sell their investments. Lock-in periods are crucial to preventing the stock from experiencing severe volatility right after it is listed, providing the business adequate time to develop its business plan and establish its market dominance.

Different investor classes have lock-in periods with varying lengths of time. For instance, the 30-day lock-in period for Zomato's anchor investors concluded in August of last year. At this point, a year after the Zomato stock was listed on the public exchanges, the lock-in period for promoters and staff has come to an end.

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