Unlike last year, when Zomato's stock last hit a peak — more than double its initial public offering (IPO) price — much of 2022 has been a rocky ride for the food delivery startup.

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Weakness in new age stocks — as the likes of Zomato and Paytm are called in the market — comes from investors' mixed views on assigning a value to a company that is yet to see profits amid a reducing appetite for tech and platform shares.

The Zomato stock jumped to a three-week high of Rs 70.1 in intraday trade after the latest earnings report showed an increase in quarterly revenue, but management commentary did little to keep the Street excited.

Can investors stuck on the wrong side of the startup's stock price use this opportunity to exit now?

Hemen Kapadia of KR Choksey Securities said investors who won bids in the IPO could exit the stock, especially on a bounce between the levels of Rs 75 and Rs 90. "I am a conservative person who would prefer to wait for the balance sheet to turn black from red before investing afresh," he told CNBCTV18.com.

Zomato is yet to become profitable — something that the fundamentally-inclined lot still doesn't approve of.

Market expert Mehraboon J Irani reiterated during an interaction with CNBC-TV18 that he would not suggest a 'buy' on tech startups such as Zomato.

"There has been a lot of fanfare around most of these companies. People have said they are great businesses, and ultimately they will possibly give you money. But most of them are bleeding, and trying to identify one out of 20 or 30 companies which will ultimately end up doing well is a tall task in this environment," he said.

And what about those who eyed Zomato shares but never entered?

Irani does see some more upside from a trading perspective.

From a "strictly trading point of view", Kapadia suggests those looking to make an entry now wait for Rs 59 and use a stop loss at Rs 50.

After the market hours on Tuesday, Zomato reported a net loss of Rs 359.7 crore for the January-March period, as against Rs 134.2 crore for the same period a year ago. The nearly three-fold increase in net loss came despite a 75 percent year-on-year jump in revenue to Rs 1,211.8 crore.

The company also disappointed the Street on the operating front. Its EBITDA loss increased three times to Rs 449.7 crore from Rs 153.5 crore a year ago, according to a regulatory filing.

"There is no point in timing the market hoping for better exits from stocks that have no scope for profitability," Tanushree Banerjee, co-head of research at Equitymaster, told CNBCTV18.com. "Investors in newly-listed startup stocks need to exercise diligence in understanding the quality of a business and scope of cash flows and profits."

On a post-earnings conference call, Zomato's management said higher order frequency was its key growth driver. It also highlighted that only 1.8 million of the company's total users place orders on its platform once a week, and 90 percent of the revenue comes from repeat customers. Zomato said it doesn’t intend to burn more than the current $1.6 billion cash.

On Wednesday, Zomato shares gave up nearly half of their gain of Rs 13.9 or eight percent gain the previous day.

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First Published:May 25, 2022 12:33 PM IST