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The share price of food delivery giant Zomato hit a new low at INR 64.70 on May 4, down about 7% from Monday’s last close.

Zomato has wiped out nearly half of investors’ wealth in the first four months of 2022, down 54% year-to-date (YTD). In fact, in the last one month, the startup’s shares have fallen about 25%.

India’s antitrust watchdog the Competition Commission of India’s (CCI) order for scrutiny on the Bengaluru-based foodtech giant’s business has heavily affected its market sentiment.

While there was major volatility in the stock since the beginning of the year, Zomato shares have continued their losing streak since April 4, after CCI ordered a probe against it over unfair pricing practices.

CCI said last month, “The Commission is of the view that there exists a prima facie case with respect to some of the conduct of Zomato and Swiggy, which requires an investigation by the Director General (DG), to determine whether the conduct of platforms have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) thereof.”

Zomato had said at that time it would continue to work closely with the antitrust watchdog to assist with its investigation. 

According to the latest report, the CCI is also tweaking the interpretation of ‘relevant market’ for the digital players, which is also leading to such investigations against several tech companies including Zomato.

Institutional investors have also been cutting down their stakes in Zomato. Foreign Institutional Investors (FIIs) have decreased their holdings to 10.44% in March 2022 quarter from 11.31% in the December 2021 quarter.

Mutual Funds have also decreased holdings to 2.82% in March 2022 quarter from 3.88% in the December 2021 quarter.

Zomato had made a stellar stock market debut on July 14 last year, opening at a 53% premium over its initial public offering (IPO) price and clinching a market capitalisation of INR 1 Lakh Cr. 

The overwhelming response to the IPO was a reaffirmation of the investors’ appetite for the new-age tech startups in the country. The momentum kept strengthening and Zomato shares reached their all-time high of INR 160.30 on November 15, 2021.

As the shares started declining significantly in January, Zomato CEO Deepinder Goyal said in a note to its employees, “This is the thing about stock markets and public companies – valuations can swing massively without any change in the fundamentals of the business depending on macro-economic factors like inflation, interest rates etc … we had no control on our valuation going up from $8 Bn in the IPO to $17 Bn at our peak, and vice versa now…”

However, there is also a sharp correction going on in equities and several other stocks in the S&P BSE 500 index have fallen in the last one month. The S&P BSE 500 index is down over 5% since April 5.

Meanwhile, Sensex has fallen more than 900 pts, Nifty is below 16,800 on May 4, after RBI indicated a 40 bps hike in repo rates.