Risks of investing in Paytm IPO

Stocks IPOs
1

We have all been eagerly waiting for the Paytm IPO and it will finally open for subscription after Diwali. Most of the start-ups are loss-making entities which is a known fact and Paytm is no exception to that. But while going through Red Herring Prospectus, what caught my attention was that company in its Risk Factors, highlighting it my never turn profitable and continue to incur significant losses.

While things can change quickly and the fortunes of even the most profitable companies can deteriorate, but this is a quiet and bold statement to make and also highlights the risks of investing in new-age companies.

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2

as you pointed out this can be true for any company as if not managed properly even financials of best companies can turn worse… but one thing with these companies debuting is their valuations which are sky high and maybe nowhere close to their real worth…

3

You will find a lot of comparisons between Amazon and these new unicorns.
I think people are incorrectly comparing such companies with Amazon. Amazon had AWS which was compensating for the loss making segments.

Here’s my detailed take on such companies - Understanding tech IPOs and stocks in Indian context