Thursday, September 29, 2022

#hypevalue: Unreal valuation. Real hype.

Date:

For the stock market enthusiasts and investors, EV startup valuation is something highly lucrative at present. While the EV startup valuations are truly phenomenal, are they living or delivering to that in reality?

Tarun Mehta, CEO of Ather Energy, one of the first and a leading players in the Electric Two-wheeler space in India, says: “It’s a stupid market”!

Ather Energy Co-Founder & CEO reacted sharply to a Tweet about Ather Energy’s market valuation as compared to Ola Electric. The context being Ather Energy, an eight-year-old venture with several patents / Intellectual Property Rights (IPR) to its name and having delivered thousands of electric scooters already, is valued at a shocking 1/25th of what a newbie, Ola Electric which hasn’t delivered a single-vehicle, valued at!

Ather Energy is currently valued at USD 187 million (INR 1400 crores), while Ola Electric has got funding at a valuation of an astounding USD 5 billion (INR 37,000 crores)! “stupid” may be an uncivil term, but both from technology and from economics perspectives, it is indeed something that the eco-system must seriously analyse. Lest, it affects various stakeholders, including customers, in the long run.

After all, primary players, like the Promoters & Founders may know something that others aren’t aware of and must be in control of the game that they have actually unleashed. However, secondary investors, like equipment, parts & raw-material suppliers, vendors, distribution network, other investors and customers, who may get attracted by the hype, but are neither in the know nor in control of what’s going to happen next!

Logically speaking, the Valuation has to be of the actual business but is actually of the Hype. It, of course, isn’t a shockingly new revelation. The market has seen how the valuation of Tesla Motors has reached astronomical levels. Tesla valuation, for instance, has crossed the magical USD 1 trillion (yes, trillion!) or INR 71,43,000 crores! Tesla Motors market share, by the way, is just about two per cent and makes far-less number cars than Toyota, Ford & GM. However, Tesla is the only car-maker in the Trillion Dollar Club! In fact, the other companies in the Trillion Dollar Club are Apple, Microsoft, Amazon and Alphabet (Google).

New age businesses are perhaps seen as having the most potential in the future. Perhaps there’s some rationale, after all. Closer home in India, given how emotional we are as Indians, the market seems to operate at even lesser depths with much less substance!

Ather Grid Ather Energy valuation

For instance, let alone masses at large or any social media, the number of followers of the eight-year-old Ather Energy, which counts the world’s largest two-wheeler maker, Hero MotoCorp, as its major shareholder, on LinkedIn – a professionals’ platform, is 1,75,000+. But that number for a company formed just a few months back, Ola Electric is 2,90,000+ Interesting the same number for another Electric two-wheeler maker, Ampere Electric, a part of Greaves Cotton group with a glorious legacy in automotive technology itself, for over 100 years now, is just about 41,000!

But the issue here in India is that the real and negative impact, given the average socio-economic level of an average Indian, could be more damaging. Zomato IPO, for instance, was historical. But right after sucking poor people up of their monies, Zomato CEO’s letter to its shareholders spoke not just about incertitude but shockingly not knowing what’s gonna happen! It stated, amongst other things: “I don’t know whether we will succeed or fail – we will surely, like always, give it our best.”

Story of PayTM, a pioneer in mainstreaming the cashless economy has been even more bizarre, leaving its millions of retail investors/shareholders gasping for breath. Its majorly successful IPO fell on its face, with PayTM shares getting listed on discount! Last we know the PayTM shares have been trading at disastrous 20 per cent + discount! It needs to be appreciated that it isn’t about some interesting financial case study. It hits millions of ordinary Indian retail investors, rather hard.

Valuation

Ola Electric also is already more than a month behind its delivery schedule. For people here in India, a two-wheeler is about everyday mobility. There would be some, who would have alternate means available. But most would struggle with not having a basic transport of their own. Delayed delivery, therefore, isn’t just simply about blaming it on chip shortage.

Unrelated. Perhaps. But such irrationality isn’t just about some notional or nominal valuation. Funding, Investment, Scaling, Burning-cash, Hiring and everything follows the same trajectory and then, follows the abjectly reverse trajectory down as strategies & business models built on hype, collapse. A CEO sacked 900 employees en masse, over a video call, just a few days back!

Start-up. New-age business. Unicorns. Valuations. Trillion Dollar Club…. Perhaps, it is time to introduce a new term in Social Media / Business-world lingo/dictionary…#hypevalue!

Also Read: Electric vehicles to shock garage ustads!

(Sanjeev Shukla is a corporate strategy and marketing leader with three decades of experience with Hyundai, Hero MotoCorp, Ford and the advertising world.)

(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Popular

More like this
Related

Business lessons from Durga Puja

Durga Puja may be just a festival, but beyond that, it has a lot to learn from, even for business owners.

Intelligent automation, robotics, low & no-code technologies to battle the ‘tyranny-of-talent’ ⭐

Industrial automation and robotics have been increasingly finding their space. But, at the same time, they are facing a massive talent shortage.

The upward trajectory of electric vehicle in India boosting the production of lithium-ion batteries

How the rising demand and sales of electric vehicles in India are boosting the production of lithium-ion batteries in the country.

Metaverse spurs Augmented/Virtual Reality growth & the big shift from mobile to wearables ⭐

How is metaverse shifting the focus from mobile to wearables and spurring the growth of AR and VR?