Meesho shares fall 10% from highs after doubling from IPO price, hitting ₹1 lakh crore market cap

Shares of Meesho Ltd. fell as much as 10% from their intraday high on Thursday, December 18, giving up all the gains from the start of trade.

The initial intraday gains took Meesho's shares past 100% returns from their IPO price of ₹111. During this move, the company also crossed ₹1 lakh crore in market capitalisation.

At the day's high of ₹233.6, the stock had risen 110% from its issue price. The stock surged over 30% ever since its stock market debut last week.

Meesho shares listed on the stock exchanges on December 10 at a 46% premium and closed 53% above its issue price. Its three-day IPO of ₹5,421 crore received healthy subscription from both, institutions and retail investors.

The overall subscription figure stood at 79 times, while the portion reserved for retail investors was subscribed over 19 times. The portion for qualified institutional buyers (QIBs) was subscribed 120 times the total number of shares on offer.

It must be noted that Meesho currently does not have significant free float in the market. Only 6% of the total outstanding equity is currently available to trade. A lack of free float means that the moves on the stock will be exaggerated in either direction as the stock is illiquid. The first real test for the stock will only emerge on January 6, which is when the one-month shareholder lock-in will open.

Shares of Meesho are trading 2.8% lower on Thursday at ₹210.23. The stock was up 20% on Wednesday, after brokerage firm UBS had initiated coverage on the stock with a price target of ₹220. At its intraday high, shares were above UBS' price target.

Also Read: Tata Group stocks gets a 'double upgrade', BofA says may be biggest beneficiary of a 'normal summer'