US-based asset management company Vanguard has marked down Ola’s valuation to $1.25 billion, a significant drop from its peak valuation of $7.3 billion in 2021. This valuation adjustment, as per a SEC filing in the US, reflects a more than 80% decrease in Ola’s value.
In February 2024, Vanguard first valued Ola at less than $2 billion ($1.88 billion) before reevaluating the company at around $2 billion in November of the same year. This recent development comes as Ola faces stiff competition in the ride-hailing space, where it has slipped to the third position behind Rapido and Uber.
Challenges in the Ride-Hailing Space
Despite ongoing efforts towards a public listing, Ola has seen its market share decline. CEO Bhavish Aggarwal announced plans to rebrand Ola Cabs as Ola Consumer, consolidating various services under one umbrella. However, Ola’s IPO plans may face delays due to unfavorable market conditions, with analysts predicting a potential postponement of at least six months.
Financial Performance and Market Positioning
In FY24, Ola experienced a 5.5% decline in operating revenue to Rs 2,012 crore but significantly narrowed its losses to Rs 10 crore, turning EBITDA profitable. Meanwhile, rival Rapido achieved unicorn status with a valuation of $1.1 billion and surpassed Ola in combined daily rides across various segments in Q2 FY25.
While Ola’s ride-hailing business remains larger than Uber’s and Rapido’s in terms of revenue, the company faces challenges in regaining market share and boosting investor confidence as it navigates the path towards a potential public listing.
