Meesho's Stock Surges 60%: Will Q4 Earnings Propel Further Growth?
Will Meesho's 60% comeback rally cool or will Q4 serve as a new launchpad?
The Economic TimesImage: The Economic Times
Meesho's shares have rebounded over 60% since March, closing at ₹205 after a recent decline. Analysts expect Q4 earnings to be pivotal, with a projected 37% year-on-year growth in net merchandise value. However, concerns over high valuations and potential overbought conditions may lead to a short-term pullback.
- 01Meesho's stock has surged over 60% since March, closing at ₹205.
- 02Analysts forecast a 37% year-on-year growth in net merchandise value for Q4.
- 03The stock may face a pullback due to high valuation concerns and overbought indicators.
- 04Meesho's consolidated net losses widened significantly in Q3, raising investor caution.
- 05The company has a large user base of 286 million monthly active users, indicating strong market presence.
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Shares of Meesho, an e-commerce platform, have experienced a 60% rebound from their March low of ₹125.56, closing at ₹205 recently. This surge follows a significant rally of nearly 129% from its IPO price within just seven sessions. Analysts are keenly awaiting Q4 earnings, predicting a 37% year-on-year growth in net merchandise value (NMV) and a 4% quarter-on-quarter increase. Despite this optimism, concerns about high valuations and technical indicators suggest the stock may be overheating, with the Relative Strength Index (RSI) nearing 79, indicating overbought conditions. Meesho's Q3 results showed a stark widening of consolidated net losses to ₹491 crore, up from ₹37 crore year-on-year, alongside a 32% revenue increase to ₹3,518 crore. Analysts caution that while Meesho boasts a substantial user base of 286 million monthly active users, the stock's elevated valuation compared to peers could lead to a de-rating. The brokerage BofA has set a target price of ₹170, while JM Financial initiated coverage with a 'Reduce' rating, highlighting Meesho's competitive advantages in the e-commerce space despite current challenges.
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Meesho's performance could influence investor sentiment and market dynamics in the Indian e-commerce sector. A strong Q4 could lead to increased investor confidence and potentially higher stock valuations.
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