Edtech giant Byju’s woes are only multiplying as the world’s largest asset manager, BlackRock, has further cut the company’s share price valuation for the third time in a row.
According to a recent filing with the US Securities and Exchange Commission (SEC), BlackRock has marked down the value of each Byju’s share to $209.57.
BlackRock Cuts Byju’s Valuation by Over 80% in Less Than a Year
BlackRock’s total stake in the company is less than 1%. However, this latest markdown pegs Byju’s overall valuation at around $1 billion – a massive drop of over 80% from the $8.2 billion figure at the end of March 2022 when BlackRock had last revised its estimate.
This comes just months after Byju’s had raised billions in October 2022 at a $22 billion valuation. Since then, the edtech leader has been battered by multiple headwinds that have upended its meteoric rise.
Byju’s Revenue Growth Slumps, Profitability Remains Elusive
Byju’s financial position has weakened considerably over the past year. Its revenue growth has slowed down significantly and profitability remains a distant reality.
The company has resorted to mass layoffs and is exploring selling some assets to cut costs and repay mounting debt obligations. Earlier in November 2022, Prosus marked down its $5.1 billion investment in Byju’s to less than $3 billion amid widening losses.
Under Regulatory Scanner for Alleged Violations
Moreover, Byju’s is also under scrutiny by Indian regulatory authorities for alleged violations. In November 2023, the Enforcement Directorate accused Byju’s of illegally transferring foreign funds to its Indian entities.
There have also been allegations that Byju’s hid certain revenue earnings and failed to provide timely documentation. Some of its past acquisitions are also being probed for possible FDI rule breaches.
Investors Press for More Transparency, Raveendran to Step Back
During Byju’s recent annual shareholder meeting in December 2023, investors reportedly pressed founder and CEO Byju Raveendran for greater transparency regarding the company’s financial position.
Shareholders also demanded quicker publication of FY2023 audited accounts, which have already been delayed significantly. There are also calls for Raveendran to step back from daily management.
Last year, Byju’s had delayed publishing its FY2021 audit report by over 17 months amid stiff business headwinds.
Regulatory Lapses, User Complaints Add to Woes
Byju’s regulatory troubles are compounded by growing user complaints around deceptive sales tactics, unclear refund policies, and poor customer service. Disgruntled users have dragged Byju’s to court over refund delays and contract breaches.
These ongoing issues have hurt Byju’s public image and cast doubt on its business integrity. Combined with financial uncertainty, the edtech leader faces choppy waters ahead even as competitor upstarts aim to grab market share.
Byju’s valuation downgrade by trusted investors indicates that its purported turnaround plans are yet to take root. With growth plummeting but costs still high, the company may have to significantly alter its expansion strategy.
As regulatory scrutiny intensifies around its alleged violations, Byju’s future prospects seem precarious. Its survival may well depend on urgently fixing core business issues instead of glossing over problems with superficial solutions.
Byju’s saga is a sobering reminder that even the most dazzling unicorns could crash quickly without strong fundamentals.