Meesho shares hit 10% lower circuit amid high volatility, here's why

Shares of Meesho, a newly listed e-commerce company, were locked in a 10% lower circuit on Monday, December 22, 2025, With today's crash, the Meesho stock has fallen 21% from its post-listing high of Rs 254.4. However, it remains 82% higher compared to the issue price of Rs 111. One of the key factor seen behind the crash is recent analyst reports that cautioned low free float may intensify volatility in the stock price. Meesho's free-float of roughly 6% has magnified price volatility. IPOs with low free-float have shown rising swings in price.

The stock fell 10% to a low of Rs 202.05 after touching an intraday high of ₹223.65. The company's market capitalisation slipped to ₹91,187 crore. Meesho's initial public offering, with an issue size exceeding Rs 5,000 crore, attracted strong demand, subscribed 79 times overall, with the retail category covered more than 19 times and qualified institutional buyers’ quota covered 120 times.

Meanwhile, UBS, the Swiss investment bank, initiated coverage on Meesho with a 'Buy' rating and a price target of Rs 220 per share. In its note, UBS stated, “Meesho’s asset light and negative working capital business model has helped the company generate positive cash flows, unlike many other internet based businesses.”

UBS projects that Meesho’s net merchandise value will grow at a compounded annual growth rate of 30% between FY25 and FY30, with contribution margins and adjusted EBITDA margins rising to 6.8% and 3.2% of NMV, respectively, by FY30. Trading volumes were elevated, and analysts pointed out that Meesho's limited free float could amplify share price swings.

UBS further commented, “This growth will be driven by a sharp rise in annual transacting users, which are seen increasing from 199 million to 518 million over the same period.”

The brokerage also expects annual ordering frequency to rise from 9.2 times to 14.7 times, while average order values are projected to decline from ₹274 to ₹233 as logistics efficiency is shared with the ecosystem. The evolving business model and margin improvements highlighted by UBS could play a significant role in shaping Meesho's performance in the coming years.