Tue Jan 21 09:10:00 UTC 2025: ## Zomato Stock Plummets 15% Amidst Blinkit’s Costly Growth

**MUMBAI, INDIA** – Zomato’s stock price experienced a dramatic 15% drop in a single day, driven primarily by the escalating losses within its quick-commerce arm, Blinkit. The sharp decline highlights the challenges of balancing rapid expansion with profitability in the fiercely competitive q-commerce market.

According to Aviral Bhatnagar, Founder and Managing Partner of AJVC, the pressure on profit margins in Blinkit is a key factor in Zomato’s struggles. While Blinkit boasts impressive growth – a 27.2% quarter-over-quarter surge in gross order value (GOV) and an annualized run rate of ₹31,000 crore – its EBITDAM plummeted to -1.3% from -0.1% due to aggressive store expansion and high customer acquisition costs. Blinkit’s rapid expansion, exceeding 1,000 stores and aiming for 2,000 by December 2025, is a contributing factor to these losses, although analysts believe this will eventually lead to improved profitability as stores mature.

Zomato’s core food delivery business also showed signs of slowing down, with GOV growth at a mere 2.3% QoQ. However, the company reported improvement in contribution margins and noted weaker demand since November. Its B2B venture, Hyperpure, is performing better, nearing EBITDA breakeven. To further diversify, Zomato has launched an entertainment app to compete in the event and movie ticketing market.

Despite the long-term growth potential, global brokerage firms have lowered their target prices for Zomato, citing concerns about rising competition and marketing costs. The company faces significant headwinds, underscoring the risks associated with prioritizing rapid expansion in a highly competitive landscape.

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