So after raising over $1.3 Bil and making losses of over ₹12,438 Cr, Sharechat was left with ₹36.2 Cr in cash and bank balances by the end of FY24.
Not to forget, its total current assets were worth ₹128.96 Cr.
This is important because just a month ago, Sharechat came out with a press release claiming that they had achieved a '67% reduction in "adjusted EBITDA loss"'. The PR positioned the news as some kind of breakthrough and also set the tone for an incoming IPO, not mentioning the net losses.
Also, in the "adjusted EBITDA loss" of ₹793 Cr (still greater than the revenue of the company, which stood at ₹718 Cr), what was not included was the finance cost, depreciation, amortization, ESOP cost, provision of doubtful assets, and foreign exchange loss.
Normally, some of these costheads might actually not be that relevant in the true sense. But Sharechat is a highly leveraged company. So much so that it paid heavy interest on debts, i.e. ₹510.57 Cr in FY24 itself.
So the company's total revenue stood at ₹718 Cr. Out of which ₹510 Cr just went in paying the interest of debts. Then the employee benefits took some ₹580 Cr, and the server rent stood at ₹559 Cr. And then, very interestingly, the company also spent about ₹420 Cr on "Content & Business Development".
All in all, in FY 24, the company made ₹718 Cr, at an expense of ₹2,644 Cr, making a net loss of ₹1,898 Cr. And it's looking at an IPO? This is a travesty of a different level!
Just a month ago, the CFO of Sharechat had said "We are adequately funded, but we see value in bringing additional investors on board as we gear up for our IPO," Charan remarked.
Really?
Looking at the financial health of the company, one might wonder why Sharechat's coming out with a string of PR articles about how it's "cornering a big share of social media market" and "narrowing losses". Isn't it embarrassing? Are the investors it's trying to coax really so gullible? Most importantly, how do we get in touch with them? These are very important questions.
Well, Sharechat is obviously pretty desperate for some cash to keep the show running. Without some new funds (and soon), it's toast. That's pretty clear. But here are two questions:
1. What would it be valued at?
All that heavy debt, super negative margins, majority of income coming from "live streaming", etc. Who wants a piece of this? And what what price? At its peak, it was valued at $5 Billion, despite only $52 Million in revenues and $400 Million in losses. Will we return to that era of exuberance? If not, how will it ever justify about $1.3 Bil in funding?
2. How much time does Sharechat have?
It's obvious that Sharechat needs a huge dose of fresh cash, or its party will get wrapped up anytime soon. But whatever happens, how far will this journey go? Will someone add to the perpetual risk that is Sharechat, to no proportionate return. If yes, for how long will this misery continue? And if not, who's going to buy this business?
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