Meesho shares tumble 7% after 43% surge in 4-day rally; what's ahead?

Shares of Meesho Ltd tumbled 7 per cent in Friday's trade, as investors judged the recent rally as excessive. The stock, which had rallied 43 per cent in the past four sessions, hit a low of Rs 218 earlier in the day, down 7.43 per cent over its Thursday's closing price of Rs 235.50. Investors probably decided to take some profits off the table. With Friday's fall, the scrip has fallen below UBS' 12-month target price o Rs 220. Another brokerage Choice Broking had suggested a target of Rs 200 on the stock. 

UBS in a note on December 17 valued the stock at three-year forward EV-to-Ebitda of 40 times, in-line with multiples of Eternal and Nykaa and close to "steady state" multiple it used for its Swiggy price target. 
The Street has been positive on Meesho, given the company enjoys negative working capital as it pays its sellers and logistics partners in 8-20 days after cash is collected. UBS expected free cash flow (FCF) to reach Rs 3,800 crore by FY30 boosted by negative working capital.

It noted that Meesho has achieved substantial scale with 23.4 crore annual buyers, 7,06,000 sellers, 18,000 logistic partners and 50,000 content creators as of September 2025. While its user base is highest among Indian e-commerce peers (25 per cent MAU share), its FY26 net merchandise value (NMV) of $4.8 billion gives it 6 per cent share of Indian online market, given the lower income/rural bent of its buyer base.

"Looking at Shopee and PDD in ASEAN and China, we see growth picking up as digital adoption accelerates in second tier towns. We estimate Meesho's NMV to grow at 30 per cent CAGR FY25-30, driven by Annual Transacting Users (ATUs) growing from 199mn to 518mn over the same period, annual ordering frequency increasing from 9.2 to 14.7, while Average Order Value (AOVs) decline from Rs 274 to Rs 233, as the company passes logistics efficiency into the eco-system," UBS said.

Choice Broking felt Meesho was best placed to monetise the shift via its zero-commission, low-AOV, discovery-led platform serving Tier-2/3 users. "Long-tail depth, content-led demand and logistics integration enable superior unit economics, with rising ad/fintech/fulfilment monetisation makes Meesho the most leveraged play on the next 10–15 crore mass-market users," it said.

The stock was listed on December 10. Against its issue price of Rs 111, the stock is still up 96.39 per cent. The online retailer commands a market value of Rs 1,01,184.40 crore.