Why did Zomato’s stock plummet to an all-time low today?

Zomato’s share price is under heavy selling pressure as the one-year lock-in period for nearly 78% of the food chain platform’s paid-up capital expires today.

Zomato’s share price fell by more than 11% in early morning trades today, as the one-year lock-in period expired for promoters, shareholders, employees, and others. The food chain platform’s total paid-up capital of the one-year overhang is around 78%, and market experts predicted that Zomato shares would be under pressure this week. Zomato Limited’s public offering was listed on the BSE and NSE on July 23, 2021.

Zomato shares opened lower in early morning trade on Monday and went on to break its all-time low of 50.05 per share before falling to a new low of 47.50 within minutes of the stock market’s opening bell today.

Anuj Gupta, Vice President — of Research at IIFL Securities, explained why Zomato shares were sold off “Zomato shares were listed on Indian bourses on July 23, 2021, which means that the one-year lock-in period for promoters, company employees, founders, and others ended today. Because these shareholders account for approximately 78% of Zomato Limited’s total paid-up capital, shares of this food service were under selling pressure in the early morning session today.”

Zomato shares were listed on the BSE and NSE on July 23, 2021, at a significant premium of more than 51%. Zomato shares went on to reach a lifetime high of 169 per share in November 2021, surpassing 1 trillion market valuations during its post-listing rally.

“Because the stock was offered at 76 per equity share in the primary markets around a year ago, it is expected to remain bears’ favorite sell on rising for short to medium term.” So, after the one-year lock-in period expires, Zomato shareholders, who account for roughly 78% of the company’s total paid-up capital, will look to exit on every bounce in the stock, particularly when it approaches its offered price of 76 per share,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.

However, Zomato shares have been under sell-off pressure after reaching a lifetime high and have been making new 52-week lows in recent sessions.