Swiggy Shares Dip 7% to Hit 52-Week Low, Zomato Down 5%: Post-Q3 Losses Weigh on Food Delivery Stocks
The Indian food delivery market has been experiencing a tumultuous ride lately, with Swiggy and Zomato, two of the leading players in the space, bearing the brunt of it. In a shocking turn of events, Swiggy’s shares plummeted a whopping 7% during the trading session on Tuesday to hit a 52-week low of ₹335.5 on the National Stock Exchange (NSE). Meanwhile, its rival Zomato’s shares also took a beating, sliding by over 5%. The dip in shares of these food delivery giants comes on the back of their weak performance in the October-December quarter of the current financial year.
The decline in Swiggy’s shares was sharp and sudden, with the company’s stock price plummeting by 7% to ₹335.5, its lowest level in the past 52 weeks. This significant drop has raised concerns among investors and analysts alike, who are now questioning the company’s ability to recover from this downward trend. Zomato, on the other hand, saw its shares decline by 5% to ₹68.8, also a fresh 52-week low.
The trigger for this sudden decline appears to be the weak performance of both companies in the October-December quarter of the current financial year. Swiggy reported a loss of ₹3,678.6 crore for the quarter, a significant jump from the ₹1,790.4 crore loss it incurred in the same period last year. Zomato, too, reported a loss of ₹2,354.2 crore for the quarter, a substantial increase from the ₹1,235.4 crore loss it incurred in the same period last year.
The weak performance of these food delivery companies is not surprising, given the challenges they are facing in the current market. The COVID-19 pandemic has led to a significant decline in demand for food delivery services, with many consumers opting for in-house cooking instead. Additionally, the rise of new competitors in the market has increased competition, making it even more challenging for Swiggy and Zomato to maintain their market share.
The decline in shares of these food delivery companies has also had a ripple effect on the broader market. Benchmark indices Sensex and Nifty tanked more than 1% on Tuesday, with the Sensex declining by 351.62 points to close at 59,454.41, and the Nifty falling by 105.95 points to close at 17,849.15.
The decline in shares of Swiggy and Zomato is a stark reminder of the challenges the food delivery industry is facing. The industry has been growing rapidly in recent years, driven by increasing demand for convenience and flexibility. However, the COVID-19 pandemic has thrown a spanner in the works, with many consumers opting for in-house cooking instead.
The decline in shares of these food delivery companies has also raised concerns about the sustainability of the business model. Both Swiggy and Zomato have been investing heavily in their businesses, with a focus on expanding their delivery networks and improving their logistics. However, with declining demand and increasing competition, it remains to be seen whether these investments will pay off in the long run.
In conclusion, the decline in shares of Swiggy and Zomato is a significant development in the Indian food delivery market. While the companies’ weak performance in the October-December quarter of the current financial year is a significant concern, it is also a reminder of the challenges the industry is facing. The COVID-19 pandemic has thrown a spanner in the works, with many consumers opting for in-house cooking instead. While the companies are likely to continue investing in their businesses, it remains to be seen whether these investments will pay off in the long run.
