Zomato, Swiggy Shares Slip 3% as Quick Commerce Rivalry Intensifies
Shares Decline Amid Competition Concerns
Shares of quick commerce players Swiggy and Zomato extended their losses, dropping another 3% on January 22, as concerns grow over intensifying competition in the sector. These concerns gained momentum following Zomato's sharp profit decline in Q3, driven by its aggressive dark store expansion plan for its quick commerce business, Blinkit. This development has dampened spirits in the food-delivery and quick commerce sector, where Zomato and Swiggy largely hold a duopoly in terms of market share.
Zomato's Aggressive Expansion
Zomato's decision to aggressively expand its store network for Blinkit led to increased investment costs, which inflated losses in the quick commerce vertical and squeezed the company's overall net profit in Q3. While several brokerages commended Zomato's expansion efforts, Jefferies also noted that it may prompt competitors to follow suit, leading to a potential increase in competition.
Stock Performance
Amid these concerns, Zomato's shares have dropped 17% in three consecutive sessions, while Swiggy's shares have lost 11% in two days. The recent downturn in Swiggy's shares has taken the stock close to its listing price. Swiggy had listed with a 7.69% premium at ₹420 per share on the NSE on November 13. The stock initially surged by 32% to ₹617 per share before experiencing the recent decline.
As of today's session, shares of Swiggy hit an intraday low of ₹424.65, while those of Zomato slipped to ₹203.85.
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