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By EquityPandit

MARKETS

Swiggy Zomato Shares Slump Over Growing Competition

Swiggy's stock fell to an intraday low of Rs 424.65 as of today's session, while Zomato's fell to Rs 203.85.

Shares of rapid commerce companies Swiggy and Zomato continued to decline, falling an additional 3% on January as worries about the industry’s escalating competitiveness grew.

Following Zomato’s steep Q3 profit drop, these worries gained traction as the meal delivery aggregator decided to pursue a bold dark shop development strategy for its Blinkit rapid commerce service.

The fact that Swiggy and Zomato effectively control a duopoly of the market caused morale to decline in the fast-food delivery and commerce sectors.Due to Zomato’s aggressive store growth spree for Blinkit, which boosted investment expenditures and inflated the losses of the quick commerce vertical, the company’s overall net profit in Q3 dropped.

Zomato’s audacious approach to retail development was praised by several brokerages, but Jefferies noted that it might incite competitors to follow suit.These concerns caused Zomato’s stock to drop 17% in three consecutive sessions and Swiggy’s stock to drop 11% in two days.The stock is now within close proximity of its listing price due to Swiggy’s recent share decline.

The stock was floated on the NSE on November 13 at a premium of 7.69%, at Rs 420 per share. Following that, the stock had a sharp increase, jumping up to 32% to Rs 617 per share.

Swiggy’s stock fell to an intraday low of Rs 424.65 as of today’s session, while Zomato’s fell to Rs 203.85.

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