The stock market journey of e-commerce giant Meesho has taken a dramatic turn. After a breathtaking post-listing rally that saw the stock more than double its IPO value in just one week, the honeymoon phase seems to be cooling off. On Tuesday, December 23, 2025, Meesho shares continued their downward slide, falling nearly 9 percent to trade around the ₹182 mark. This move marks a cumulative decline of 21 percent over the last three trading sessions, leaving many retail investors wondering if the “rocket ride” is over.
The Reality Check After the Rally
Meesho made a stellar debut on the stock exchanges on December 10, 2025, with an issue price of ₹111. Within days, it hit a record high of ₹254.40, driven by a combination of high demand and a very low “free float”—meaning only about 6 percent of the total shares were available for public trading.
However, the tide turned as the stock hit the lower circuit on Monday and continued its decline today. Analysts point out that the recent correction is a natural reaction to an “overheated” valuation. When a stock rises 110 percent in seven days, profit-booking is almost inevitable.
Why are Analysts Worried?
Several market experts have flagged specific concerns that are now weighing on the stock price:
- Valuation vs Fundamentals: At its peak of ₹254, Meesho was trading at a valuation that many believed outpaced its current financial health. While revenue growth is strong, the company reported a significant loss of ₹3,941 crore in FY25, primarily due to one-time accounting items and ESOP costs.
- The Profitability Question: Unlike some of its peers, Meesho is still in a transition phase. While it has turned free cash flow positive, consistent bottom-line profitability remains a long-term goal.
- Liquidity Risks: The low free float that helped the stock soar is now working against it. In a low-liquidity environment, even a small amount of selling pressure can cause the share price to drop sharply.
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What Lies Ahead for Investors?
Despite the 21 percent drop, it is important to remember that Meesho is still trading approximately 64 percent above its original IPO price of ₹111. This suggests that long-term faith in the brand remains, even if the short-term price was too high.
Investors should keep a close eye on January 2026. This is when the initial lock-in period for certain pre-IPO investors will expire. If these large investors decide to sell their holdings, the market could see an influx of shares, potentially leading to further price volatility.
For now, the consensus among brokerage houses like UBS remains cautiously optimistic for the long term, citing Meesho’s asset-light model and its dominance in Tier-2 and Tier-3 cities. However, for the immediate future, “caution” is the keyword as the stock seeks a stable floor.
Disclaimer: The information provided in this article is for educational purposes only and does not constitute financial advice. Stock market investments are subject to market risks. Please consult with a certified financial advisor before making any investment decisions.
