Zomato shares plunged nearly 10% in intraday trade on Wednesday amid reports that Uber Technologies, one of its key stakeholders, is mulling to sell its entire stake in the food delivery company. Ride-hailing app Uber, which currently holds 7.8% shares in the restaurant aggregator, is likely to fetch at least $373 million (₹2,939 crore) by offloading its stake in the company through a block deal. The stake sale has been fixed at ₹48-54 per share, a discount of 2.8-13.6% to Tuesday’s closing price of ₹55.60 on the Bombay Stock Exchange (BSE), as per the term sheet issued by BofA Securities, the bookrunner for the deal.

In January 2020, Alibaba's Ant Financial-backed Zomato acquired the Indian operations of Uber Eats, the food delivery business run by Uber, for around $350 million. As part of the deal, the American ride-hailing app received about 10% stake in the food technology firm.

Reacting to the news, Zomato share price tanked 9.62% to hit an intraday low of ₹50.25 on the BSE, after rising 20% in the previous session as investors cheered its June quarter earnings. The foodtech company’s shares opened lower at ₹52.55 against the previous closing price of ₹55.6 amid spurt in volume trade. By 1:00 PM, as many as 6,960 lakh shares changed hands over the counter on the BSE as compared to two-week average volume of 227.67 lakh stocks, while market capitalisation dropped to ₹41,921.6 crore.

The development came a day after Zomato shares rallied 20% on Tuesday after the homegrown online food delivery firm reported decline in its consolidated net loss to ₹185.7 crore in Q1 FY23, compared to a loss of ₹356.2 crore a year ago and ₹359.7 crore in the previous quarter. The Deepinder Goyal-led company saw its revenue from operations rise by 67% to ₹1,414 crore during the quarter under review on the back of strong order volumes and a slight improvement in average order values. On a quarter-on-quarter basis, its revenue grew by 16% from ₹1,212 crore in the March quarter of 2022 (Q4 FY22).

In a post earnings call on Tuesday, Zomato’s co-founder Deepinder Goyal said the company has lowered its overall investment guidance in Blinkit to $320 million from $400 million, which includes its $150 million investment into the company so far. At the end of June quarter, the company had a cash balance of ₹11,400 crore.

As per the company, losses for Blinkit are coming down every month, from ₹204 crore in January 2022 to ₹92.9 crore in July, owing to operating leverage, improved execution, and increase in commissions and customer delivery charges. Blinkit has also shut down a number of unviable dark stores, which were not scaling, which also brought the losses down.

Zomato got listed on the domestic bourses in July last year and it had been consistently under stress amid concerns about valuations and future growth prospects. The stock was listed at a 51% premium over the issue price of ₹76 per share on the BSE on July 23, 2021. The homegrown food delivery platform currently trades 70% lower than its life-time high of ₹169.10 touched on November 16, 2021. It recently hit an all-time low of ₹40.55 on July 27, 2022.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.