Why do the markets need to be wary of the fake GMV Game?
5 March 2019 9:59 AM GMT
?Soaring valuations of companies who have never earned a profitable penny should be raising alarm bells among investors and precisely underlines the need as to why the Gross Merchandise Value metric needs an examination to...
- “Soaring valuations of companies who have never earned a profitable penny should be raising alarm bells among investors and precisely underlines the need as to why the Gross Merchandise Value metric needs an examination to avoid a repeat of the dot-com crash in the year 2000.
- India is home to nearly 50,000 startups, and since 2014 Indian startup ecosystem has managed to secure more than USD 120 billion in investments from private equity and venture capitalists.
- However, a closer look will entail that the Indian startup story might not be as buoying and the traditional metric like GMV — considered as the benchmark of company’s performance — doesn’t really present the holistic picture of the company’s financial health.
- Due Diligence – Increased scrutiny of financial health Gross Merchandise Value (GMV) has been the vanity indicator of all e-commerce entities that have emerged across the globe, including India and considered a benchmark figure by businesses to establish their credentials and the value proposition they bring to the table when scouting for investments.
- While calculating the GMV, companies do not take into account the cash back offers, discounts, product return, and cancellations.
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