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Ola, Once Valued at $7.3 Billion, Now Pegged Below $2 Billion by Vanguard

The tumultuous journey of Ola, the ride-hailing giant led by Bhavish Aggarwal, has taken another significant turn as US asset manager Vanguard slashed its valuation to approximately $1.9 billion. This marks a staggering 74% decrease from its peak valuation of $7.3 billion, signaling a challenging period for the Indian mobility company.

This latest adjustment, reported by ET, represents the third consecutive markdown by Vanguard. Previously, the firm had valued Ola at $4.8 billion in May of the previous year, followed by a reduction to $3.5 billion in August. The downward trend underscores the struggles Ola has faced in stabilizing its financial position amidst fierce competition and evolving market dynamics.

Despite its efforts to narrow losses, Ola continues to grapple with profitability. In fiscal 2023, the company reported a 65% reduction in losses to Rs 1,083 crore (about $130.5 million). However, its consolidated revenue showed a promising 42% year-on-year increase to Rs 2,799 crore, indicating some positive traction in its operations.

One bright spot for Ola emerged from its India mobility business, which reported a standalone EBITDA profit of Rs 250 crore in FY23, a notable turnaround from the Rs 66 crore loss in the previous fiscal year. This achievement underscores the company's resilience amidst a challenging market landscape.

Ola's journey has been marred by various challenges, including a prolonged price war with Uber and the emergence of niche competitors like BluSmart. Additionally, navigating through evolving government regulations has further complicated its path to profitability.

In response to these challenges, Ola has undertaken strategic initiatives such as spinning off its e-scooter business, Ola Electric, into a separate entity and venturing into artificial intelligence with Aggarwal's new startup, Krutrim. These moves reflect Ola's efforts to diversify its offerings and explore new avenues for growth.

The repeated valuation cuts by Vanguard, from $4.8 billion last May to now below $2 billion, reflect 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 amidst market uncertainties, signaling a cautious approach by investors.


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