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Paytm loss widens as concerns about profitability remain

Paytm loss widens as concerns about profitability remain

  • Published: 22nd May 2022, 18:33

Paytm, the once high-flying Indian fintech startup, published relatively weak quarterly results as business conditions worsened.

The company’s net loss jumped to 7.6 billion rupee or $97.7 million in Q1 as expenses related to payment processing, marketing, and employee benefits widened. These results raise questions about whether the firm will be able to become profitable in 2023 as it had guided before. 

Its revenue rose by 89% to 16.41 billion rupees while its total expenses surged to over 23.7 billion rupees. It ended the quarter with over 38.2 billion rupees in cash and short-term equivalents whole its total liabilities rose to 33 billion rupees.

Paytm has been struggling in the past few years as competition in the payment industry rises. Some of the biggest competitors in the industry are firms like Walmart, Alphabet, and Meta Platforms among others. 

This explains why the company’s share price has been in a strong sell-off in the past few months. After going public in November last year, the company’s stock has crashed by more than 70% from its all-time high. As a result, its total market cap has crashed to 373 billion rupees. At its peak, the firm was valued at over $16 billion.

Paytm is not alone as other fintech stocks have been in a strong downward trend. PayPal has lost over 74% from its all-time high. Similarly, fintech stocks like Affirm, Remitly have been in a strong downward trend as well.

Investors are worried that these companies will experience slow growth as the world moves from the Covid-19 pandemic.

Crispus Nyaga

Crispus Nyaga is a full-time financial analyst and trader with more than 7 years in the industry. He has been fortunate to work for several fintech companies, mostly from Europe, Asia, and North America. His work is published in leading platforms like Seeking Alpha, Invezz, InvestingCube, Capital.com, and Marketwatch. Crispus operates from a private office in Nairobi.