Flipkart in Trouble?
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Case Code: BSTR522 Case Length: 12 Pages Period: 2007-2017 Pub Date: 2017 Teaching Note: Not Available |
Price: Rs.300 Organization: Flipkart Online Services Private Limited Industry: E-commerce Countries: India Themes: Business Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
Leading Indian e-tailer Flipkart Online Services Private Limited (Flipkart) hit rough weather after being devalued twice in 2016. Mutual investment company Morgan Stanley , in its filings with market regulator US Securities and Exchange Commission (SEC), had reduced the value of its holding in Flipkart by 15.5% in February 2016, pushing Flipkart’s overall valuation to below US$10 billion. According to Morgan Stanley, Flipkart’s enterprise value stood at US$9.39 billion, against around US$15 billion in 2015 . In February 2016, another investor, T Rowe Price Group Inc. , also reduced the value of its holding in Flipkart by 15%. According to experts, the devaluation would impair Flipkart’s capacity to raise funds in the future. Apart from this, Flipkart was in hot water due to tough competition in the e-commerce space, frequent changes in its top management, government regulations on e-tailers, and diminishing profits. Commenting that Flipkart’s strategies were flawed, Media group Network18’ s founding CEO Haresh Chawla said, “Flipkart is in the middle of a storm of its own making. The ignominy of squandering its first mover advantage to Amazon will only heighten the crisis brewing inside.”
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