Are Paytm shares a good investment in 2022?

Paytm has been the following two since inception

1. Cash burn for investors and
2. Wealth destroyer for since listing

Why do I say so?

Let us look at the chart below

The company stock had a tepid listing and has been in a downward spiral since then.

The basic problem lies in the fact that the business model of the company is still a question mark i.e. how it intends to make money once it has captured the market by luring people to use the platform/mobile application.

This bothers many Institutional Investors and Value Investors as Paytm has been trying the following:

1. Payment Wallet: This is now a thing of the past since UPI has been launched and heavily adopted
2. UPI Payment: Here it faces stiff competition from Google Gpay, Flipkart Phonepe, etc.
3. Paytm Mall: This has flopped terribly as it is trying to compete with JioMart, Flipkart, Amazon, etc.
4. Payment Gateway: Here again it is facing competition from well entrenched players like PayU, Razor pay, etc.
5. Paytm BNPL: Buy Now Pay Later (BNPL) is now a crowded market with PostPe, Slice, Uni 1/3rd, Cred, Amazon, etc.
6. Credit Card: Again the value creation is a question mark as Banking players are well poised to leverage their network and do cross or bundled selling

Despite all this, there have been some recent reports where global investment banks and brokerages are showing some optimism in stock if it corrects further for making an entry into it

• Goldman Sachs has reduced the target price considering the headwinds
• Yes Securities is still cautiously optimistic
• Morgan Stanley has advised to trim the holdings as per its research
• Macquarie has kept a target of INR 700, a huge discount from the listing price and even the current price

Owing to this, it is better to refrain from the stock and invest in companies that are profitable or keep money in debt instruments for making decent returns.

Hope this helps

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Happy Investing!!

References:

1. Paytm, India’s largest internet ecosystem with a robust multi-payment architecture
2. Paytm stock may rally up to 119%: Goldman Sachs’ bull case scenario
3. Paytm Q3 Review – Underlying Traction Positive But It’s Too Early To Turn Bullish: Yes Securities
4. Paytm stock rating upgraded to ‘Buy’ but Goldman Sachs, Morgan Stanley trim target price
5. Paytm shares hit an all-time low today. Should you buy the stock now?
6. Macquarie slashes Paytm’s target price to ₹700, Goldman Sachs upgrades it