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US-based Vanguard slashes Ola's valuation to below $2 billion

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ISN Team
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US asset manager Vanguard has once again reduced the valuation of Bhavish Aggarwal-led company. The firm reportedly reduced the valuation of Ola to approximately $1.9 billion, marking a significant 74% decrease from its peak valuation of $7.3 billion. 

The latest adjustment, which was first reported by ET, reflects the third consecutive markdown by Vanguard. Previously, In May last year, Vanguard valued the company at $4.8 billion and in August at $3.5 billion.

The struggle to achieve profitability 

Despite efforts to stabilize its financial standing, Ola has struggled to achieve profitability. The company, which last raised funds in December 2021 at a valuation of $7.3 billion, has seen its losses narrow by 65% to Rs 1,083 crore (about $130.5 million) in fiscal 2023. 

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However, its consolidated revenue saw a nearly 42% year-on-year increase to Rs 2,799 crore, indicating some positive momentum in its operations.

Last month, Ola's India mobility business reported a standalone EBITDA profit of Rs 250 crore in FY23, a stark contrast to the Rs 66 crore loss in FY22.  

Market challenges 

Ola's journey has been fraught with challenges, including a prolonged price war with Uber and the emergence of niche competitors like BluSmart. These hurdles, compounded by changing government regulations, have made profitability elusive.

In response, Ola has diversified, spinning off its e-scooter business, Ola Electric, into a separate entity aiming for a significant public offering, while also venturing into AI with Bhavish Aggarwal's new startup, Krutrim.

The ongoing valuation cut

The repeated valuation cuts by Vanguard, from $4.8 billion in May last year to now under $2 billion, mirror a broader trend of investor recalibration within the tech startup ecosystem. This reassessment is not unique to Ola, as other startups have also seen their valuations adjusted in response to the macro and microeconomic environment, reflecting a cautious approach by investors amidst market uncertainties.

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