Meesho Share Price Rallies 5%, Snapping Sharp Sell Off

Shares of recently listed e-commerce platform Meesho Ltd. were back in focus on Wednesday, edging higher in early trade after a choppy week on the exchanges.

The stock rose nearly 5% to Rs 197.20 apiece, snapping a three-session losing streak and partially recouping recent declines.

This rebound follows a sharp slide earlier in the week. On Monday, Meesho shares were locked in the lower circuit, falling 10% and extending losses for a second straight session. The fall came on the heels of a 43% rally over four trading sessions between Dec. 15 and Dec. 18, highlighting the heightened volatility surrounding the counter.

What drove the sharp sell-off? A combination of factors contributed to the steep correction:

Meesho currently has a relatively low free float, with only a limited number of shares available for secondary market trading. Such restricted supply tends to magnify price swings in both directions. After the recent run-up, even modest selling pressure was enough to push the stock into a lower circuit.

The mid-December rally was fuelled largely by aggressive early demand and short-covering. As that initial buying momentum faded, profit-taking kicked in, prompting a natural pullback. With sentiment reversing quickly, the stock faced sharp downside pressure.

While Meesho continues to post strong revenue growth and operates a distinct social commerce model, the timeline to sustainable profitability remains uncertain. Investors are cautious about the trajectory of earnings, especially in a market environment that is increasingly prioritising profitability over pure growth.

On a three-year forward basis, Meesho trades at around 40x EV/Ebitda, broadly comparable to peers such as Eternal and Nykaa. However, given Meesho's existing profitability profile, some investors view these valuations as stretched, heightening the risk of sharp corrections on any adverse trigger.

Meanwhile, competitive intensity remains high in both e-commerce and social commerce. Established platforms and new entrants are contesting market share, even as regulatory scrutiny over product quality and seller compliance has increased, adding another layer of risk to the business model.

Against this backdrop, Wednesday's bounce suggests bargain hunting at lower levels, but also underscores that volatility in Meesho's stock may persist in the near term.