Is investing in Meesho still a profitable venture, or will you lose your money? Here's the answer..

Meesho has captured investors' attention since it entered into the Indian IPO market. The company's public issue received an overwhelming response, and the stock made a strong debut on its listing day. The subsequent surge in prices attracted many investors, but the question remains: is investing in it still wise, or is the risk too high? To answer this, it's crucial to understand not only the stock's performance but also the company's business model and financial health.

Why did Meesho's stock become the talk of the town after listing?
Meesho's IPO was heavily oversubscribed, and the stock opened significantly above its issue price on listing day. ​​It experienced sharp fluctuations on the first day and reached a new high within a few days. Investors who didn't get shares in the IPO bought them from the open market, further increasing demand. However, experts believe that making investment decisions based solely on listing gains is not advisable.

Meesho's strong foothold in smaller cities
The company's business is primarily based in Tier-2 and Tier-3 cities. Most of its orders come from smaller cities and towns, where customers prefer low-priced products. Buyers in these areas place smaller orders more frequently, maintaining consistent traffic on the platform. This strategy has allowed Meesho to give tough competition to larger e-commerce platforms in these regions.

A unique business model sets it apart
Meesho's model is different from other e-commerce companies. It doesn't charge platform fees from sellers and doesn't levy extra charges on buyers. The company earns revenue from logistics, fulfillment services, and advertising. By focusing on low-priced products and frequent purchases, Meesho has created a unique market for itself, setting it apart from other companies.

Where will the IPO proceeds be used?
The funds raised through the IPO will be used to further strengthen the company's business. This includes improving technology and cloud infrastructure, spending on marketing, potential acquisitions, and new business ideas. It is believed that this will enhance the experience for both buyers and sellers on the platform and accelerate the company's growth.

The biggest question: When will it become profitable? Meesho's biggest weakness is still its profitability. Although the company's losses have decreased in recent years and revenue has grown rapidly, the business is not yet fully profitable. In recent months, losses have increased again due to rising marketing and technology expenses. The company has shown improvement on the cash flow front, but maintaining this over the long term will be a challenge.

What to consider before investing?
Experts believe that Meesho is a fast-growing and innovative e-commerce platform with a strong presence in smaller cities. The growth opportunities are significant, but uncertainty regarding profitability remains. Therefore, this stock may be more suitable for investors who are willing to take risks and have a long-term perspective.

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