File Image | Meesho shares hit the lower circuit after a sharp post-listing rally, falling nearly 10 percent in two days.
Mumbai: After a powerful rally following its stock market listing, shares of e-commerce platform Meesho have now seen a sharp correction. On Monday, the stock slipped to Rs 201.68 and hit the lower circuit, indicating heavy selling pressure. Over the last two trading sessions, Meesho shares have fallen by nearly 10 per cent, worrying short-term investors.
From Blockbuster Listing to Volatility
Meesho made a strong debut on the stock exchanges at an IPO price of Rs 111, listing at a premium of 46 per cent at Rs 162. On the first day, the stock closed near Rs 170. The IPO, worth over Rs 5,000 crore, was hugely successful and subscribed 79 times, with retail investors alone subscribing nearly 19 times. Within just over a week, the stock more than doubled from its issue price.
Why the Stock Came Under Pressure
In the last seven trading sessions, Meesho shares jumped nearly 110 per cent from the IPO price. This rapid rise created a short squeeze, where many traders who had sold the stock short failed to deliver shares on time. As a result, over one crore shares were pushed into the exchange auction mechanism. Such sharp moves are common in stocks with limited supply.
Low Free-Float Adds to Volatility
Meesho has a free-float of only about 6 per cent, meaning very few shares are available for public trading. This low supply has made the stock highly volatile. Similar situations were seen recently in other IPOs like Groww, where sharp rallies were followed by heavy corrections due to limited share availability. Despite the fall, Meesho has already created over Rs 50,000 crore in investor wealth since listing.
What Brokerages Are Saying?
Global brokerage UBS has started coverage on Meesho with a ‘Buy’ rating and a target price of Rs 220. UBS likes the company’s asset-light business model, negative working capital cycle and steady cash generation. It expects strong growth in users and transactions over the coming years.
Choice Institutional Equities is also positive, giving a Rs 200 target, highlighting Meesho’s strength in tier-2 and tier-3 cities.
Long-Term View Remains Positive
While the recent fall has cooled short-term excitement, experts believe Meesho’s long-term growth story remains strong, supported by rising demand from smaller cities and improving user engagement.
