Why Alibaba, Zomato's Uber-Backed Stock, Is Plunging Today

Shares of Indian food delivery company Zomato plunged 14% in intraday trading on Monday, hitting a low of INR 46 per share, wiping out more than $125 million in wealth investors.

The crash: The stock price crash began when the mandatory one-year lock-up period for promoters, employees and certain shareholders ended on Saturday, with more 6.1 billion shares exiting the lock-up period.

Since these shares accounted for nearly 78% of the company's paid-in capital, analysts expected the share price to fall.

The company's shares were listed on India's BSE and NSE stock exchanges on July 23, 2021.

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Investors: In January 2020, ride-sharing company Uber Technologies Inc UBER sold Uber Eats to Zomato for a 9.99% stake in the Indian food delivery startup.< /p>

Uber currently owns a 7.78% stake in Zomato. Other major investors include Ant Group, Alibaba Group Holding Ltd BABA, Tiger Global Management LLC and Sequoia Capital India LLP.

Benzinga's view: Zomato shares have fallen below their all-time low of INR 50.12 as seen in May. Even on an hourly chart, the stock is trading well below its 200-day moving average. In the short to medium term, the stock does not look attractive unless it manages to close convincingly above the INR 50 level.

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