The Decline of Byju's: A Financial Analysis

Sydney Times

— 1 min read
The Decline of Byju's: A Financial Analysis

Introduction

Byju's, once a shining star in the Indian edtech space, has faced significant challenges in recent times leading to a sharp decline in its valuation. Let's delve into the key factors contributing to this downfall.

BlackRock's Valuation Write-Down

  • BlackRock, an investor in Byju's, has revealed in an SEC filing that its stake in the company, once valued at $22 billion, is now considered to be worth nothing.
  • This marks a significant devaluation and reflects the tumultuous period Byju's has been navigating.

BlackRock's Previous Valuation Adjustment

  • Notably, BlackRock had previously devalued Byju's to about $1 billion at the end of October last year, showcasing a continued downward trend.

Byju's Struggles

  • Byju's faced challenges in meeting financial reporting deadlines, culminating in a shortfall of over 50% in revenue projections last year.
  • Governance issues, including the resignations of key board members and auditors, further exacerbated the situation.
  • The startup's $1 billion fundraise deliberation was derailed amidst the turmoil.
  • Byju's raised $200 million this year at a significantly reduced valuation, leading to legal disputes with major investors.

HSBC's Assessment

  • HSBC has also estimated a steep decline in the value of Prosus' stake in Byju's, to the point of attributing zero value to it.

Prosus' Stake in Other Startups

  • Additionally, HSBC highlighted that Prosus' stakes in Meesho, PharmEasy, ElasticRun, and Stack Overflow have also experienced diminished value.

Valuation Methodology

  • HSBC applies a 50% discount to the latest funding round or acquisition price for assets older than six months to adjust for market corrections.

Conclusion

The sharp decline in Byju's valuation, coupled with legal disputes and governance issues, paints a challenging picture for the once-promising edtech giant. The future trajectory of Byju's remains uncertain as it navigates through these turbulent times.

Read more