Overhauling the e-commerce and financial industry in India, Meesho, the nationwide number one social commerce platform, is getting ready to raise money via stock sales (Initial Public Offering or IPO). The startup that helps millions of small sellers to sell and market their goods through social media may be listed on Indian stock exchanges soon, which may also indicate the maturity of the startup and the market potential.
According to a detailed report by DNP India, the IPO of Meesho is likely to be one of the largest in the Indian tech sector after the pandemic. 5 With Meesho showing high growth rates, profitability, and an ample pool of users in Tier 2 and Tier 3 cities, its declaration to move towards an IPO has heated up the imaginations of retail investors and market analysts alike.
Why Is Meesho Going Public Now?
The move is being viewed as a strategic masterstroke by Meesho as it plans to take advantage of propitious market forces and its recent fortune of achieving profits. It is an indicator of the conviction of company in its asset-light business, such that it is able to acquire customers cheaply using platforms such as WhatsApp and Instagram.
The other major driver is the fact that India also witnessed a rampaging investor demand in tech-driven companies that can provide scalable, digital-first services. Meesho recently aimed to raise 1-2 billion dollars through an IPO and may engage the attention of both institutional and retail stockholders.
What Should Retail Investors Keep in Mind?
Although the euphoria is excusable, financial analysts are advising retail investors to be careful. They are to consider:
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Revenue and sustainability model of the company
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The presence of e-commerce stores that are large-scale, such as Flipkart and Amazon
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Stability of profitability and market share strategy
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IPO prices and listing profits
Investors are also cautioned to read through the Red Herring Prospectus (RHP) after it is filed and determine their risk-tolerance level before investing in a fast-growth technology stock.
A Game-Changer for Indian Social Commerce?
In the event of success, the IPO of Meesho may become a model that should be taken into consideration by other Indian startups in the social commerce segment, which may decide to go public. It also confirms the feasibility of the digital entrepreneurship ecosystem that is emerging in India, with small sellers, most of them women, gaining economic freedom.
