Zomato and Swiggy are growing rapidly, generating revenue and employment. However, they are currently trading at high PE ratios and are still making losses. Swiggy’s market cap is crossing 1 lakh crore, which is a whopping 9X revenue multiple. Despite a decrease in losses and an increase in revenue, the food delivery business revenue has flattened this quarter. The high valuations and negative cash flow pose a significant risk to investors.
These food delivery companies offer convenience and have the potential to monetize their data through advertising. They also have a positive impact on the economy by driving spending and productivity. However, the intense competition between them could lead to a loss of market share, and it remains to be seen how they will become profitable in the future.
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