Meesho Stock Drops 40% From Peak, Falls Below Listing Price

Shares of Indian e-commerce firm Meesho have experienced a significant decline, falling nearly 40% from their all-time high. The stock has now slipped below its initial listing price, a key psychological level for investors. This sharp correction follows the company’s latest quarterly results, which showed a widening of losses.

Quarterly Results Spark Investor Concern

The primary driver behind the stock’s recent slide was Meesho’s financial report for the third quarter. The company’s losses widened sharply during the period, raising immediate concerns among investors about its path to profitability. While many high-growth tech companies initially operate at a loss, the increasing deficit has prompted a reevaluation of the stock’s near-term prospects. This reaction highlights the current market environment where investors are increasingly focused on financial sustainability alongside top-line growth.

Analysts point to significant investments and competitive pressures as reasons for the expanded losses. Meesho operates in the highly competitive Indian social commerce and value e-commerce space, where customer acquisition and retention often require heavy spending. The need to invest in technology, logistics, and marketing to fuel growth has put pressure on the company’s bottom line, leading to the disappointing quarterly figures.

Brokerages Maintain Long-Term Optimism

Despite the near-term challenges, two major foreign brokerages, UBS and Bank of America (BofA), have maintained a constructive view on the stock. Both firms see a potential upside of approximately 26% from current levels. Their optimism is not based on ignoring the losses but on evaluating the underlying business fundamentals that they believe will drive long-term value.

UBS and BofA cite Meesho’s strong revenue growth as a primary reason for their bullish stance. The company continues to expand its gross merchandise value and user base at a rapid pace, indicating strong market demand for its platform. Furthermore, analysts highlight the company’s improving logistics efficiency. As Meesho scales its operations, its cost per delivery is expected to decrease, which should gradually improve its unit economics and margins over time.

The Core Investment Thesis: User Expansion and Market Position

The long-term investment case for Meesho, as outlined by these brokerages, rests on its unique position in the Indian market. The platform is particularly successful in tier 2 and tier 3 cities, attracting value-conscious customers and small sellers. This focus on a vast, underserved segment of the Indian population provides a massive runway for user expansion. The brokerages believe that capturing this growing user base is more critical in the early years than showing a profit.

For general investors, the situation presents a classic growth-versus-profitability dilemma. The stock’s volatility reflects the market’s ongoing debate. On one side, the widening losses are a clear near-term risk. On the other, the company’s strong market position and rapid growth in a huge economy like India’s offer a compelling long-term opportunity. The divergent views between the stock’s price action and brokerage optimism underscore the uncertainty and the high-risk, high-reward nature of investing in high-growth tech companies before they achieve consistent profitability.