US mutual funds mark down Flipkart again

Valic, Fidelity pare share value by 11.3%, & 3.2%, for August quarter

India’s largest e-commerce marketplace Flipkart has been subjected to yet another markdown by mutual fund investors Valic and Fidelity in their most recent filings with the US regulators.
 
The markdowns in Flipkart’s value come after a successful festive season sale in October, where the company is believed to have outsold global rival Amazon by a big margin. The value of the company reflective in the filings is as of the three months ended August 2016.
 
Valic marked down the value of its shares in Flipkart by 11.3 per cent to $95.84 a share in the August quarter, from a price of $108.04 a share in the May quarter.
 
The latest share price values Flipkart at $10.24 billion, down from a peak value of $15.2 billion.
 
On the other hand, Fidelity’s markdown was a lot more conservative, paring back Flipkart’s value by only 3.25 per cent to $81.55 per share in the quarter that ended in August.
 
The markdowns by the mutual fund investors come after they propped up the value of Flipkart in the May quarter, which was, at the time, seen as a possible revival of the company’s valuation. Given the firm’s strong performance in the festive season month of October, it is yet to be seen if investors push up the company’s value once again.
 
Global competition from Amazon has forced down the value of not only Flipkart but also rival Snapdeal. In its consolidated earnings for the six months ended September, Japanese investor SoftBank reported a $550-million loss, which it attributed largely to the drop in value of its investments in Snapdeal and Ola.
 
Flipkart founder Sachin Bansal had called the markdowns by investors a ‘purely theoretical exercise’ back in April, when Morgan Stanley and T Rowe Price had performed a similar exercise. “I do not think anyone’s valuation has changed just because somebody or small shareholders of these companies have changed their opinion. I do not worry too much about that.”
 
Media reports have suggested that Flipkart is back on the market to raise fresh funds of as much as $1 billion. However, the valuation the company is seeking is putting off investors, including Amazon’s rival Walmart. While Flipkart may deny that its value has changed, it is to be seen if the company can hold on to or improve on its $15.2-billion valuation in its next round.