American asset management giant BlackRock, which has over $9.42 trillion in assets under management, has once again played with Bengaluru-based Byju's valuation.
This time BlackRock significantly reduced the valuation of the troubled edtech giant to about $1 billion, representing a sharp 95% decline from its peak valuation of $22 billion.
According to a TechCrunch report, which first reported the development, BlackRock's latest valuation is based on a price of $209.6 per share, a dramatic fall from the peak price of $4,660 in 2022.
The pattern of devaluation
This isn't the first time BlackRock has cut Byju's valuation. Earlier, in May 2023, BlackRock had reduced the valuation to $8.4 billion. Prosus, another investor holding about 9% in Byju’s, also marked down its valuation to less than $3 billion in the same year.
These significant markdowns reflect a broader trend of declining valuations for Byju's, which had previously been valued as high as $50 billion by investment bankers.
Byju's ongoing financial struggles
The massive valuation markdown comes at a time when Byju's is grappling with several financial challenges, including fresh fundraising, meeting payroll, and managing over a billion dollars in debt.
Besides financial struggles, the troubled edtech giant is also facing high-profile departures, including CFO Ajay Goel and three key board members. Notably, It has been criticized by investors like Prosus for not evolving sufficiently and disregarding advice.
Impact of external factors
It's worth mentioning that internal factors weren't the only reasons; external factors have also played a similar role in Byju's downturn. The company's plans to go public in early 2022 through a SPAC deal were put on hold due to market downturns following Russia’s invasion of Ukraine.
The delay, coupled with worsening market conditions, added to the pressure on Byju's to address unresolved issues.
The role of regulatory challenges and investors' pressure
Notably, Byju's is also facing regulatory challenges, including allegations of mis-selling courses and violations of foreign exchange laws. The Enforcement Directorate (ED) issued notices to the company for alleged Foreign Exchange Management Act violations.
Following this, Byju's investors, At a recent annual general meeting, demanded transparency and clarity on the company's financial status, with some reportedly urging CEO Byju Raveendran to step aside from day-to-day operations.