BlackRock's Grim Valuation, Byju's, Once High-Flying, From $22 Billion to $1 Billion
Edtech Giant Byju's Faces Investor Exodus as Valuations Tumble Worldwide
12 January 2024
Byju’s, once valued at $22 billion, faces a severe downturn with BlackRock's third markdown in 2023, slashing its valuation to a mere $1 billion, signaling a 95% drop.
Global skepticism towards Byju's business is evident as other investors, including Prosus, have also devalued the edtech giant, with Prosus marking it below $3 billion in November.
Operational challenges, financial reporting delays, and accusations of mis-selling courses compound Byju’s troubles, leading to salary payment delays, staff layoffs, and increased pressure on founder Byju Raveendran to step back from day-to-day operations. The company's ability to continue as a going concern is under scrutiny.
The once high-flying edtech giant, Byju’s, is facing a turbulent journey as BlackRock, the world's largest asset manager, recently marked down the implied valuation of the struggling firm to a mere $1 billion. This staggering drop, more than 95% from its peak valuation of $22 billion in October 2022, is the third such markdown by BlackRock in 2023. In a regulatory filing with the US Securities and Exchange Commission, BlackRock valued Byju’s parent company, Think & Learn, at $209.57 per share for the quarter ended October, reflecting the grim reality of Byju’s financial health.
This significant devaluation is part of a broader trend of skepticism surrounding Byju's business, as other investors have also revised their valuations downwards. Prosus marked down Byju’s valuation to below $3 billion in November, compared to its $5.1 billion valuation in March the same year. These downward adjustments highlight the challenges faced by new-age companies, not only in India but globally, as their valuations come under increasing scrutiny.
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The decline in Byju’s fortunes is exacerbated by operational struggles, delays in financial reporting, and allegations of mis-selling courses. The company's founder, Byju Raveendran, is grappling with the need for new financing, leading to salary payment delays and other operational challenges. With a plan to sell group assets to clear debt, Byju's is striving to overcome a cash crunch within the next 45-60 days.
Byju's, which acquired Aakash Institute in a nearly $1 billion deal in 2021, has also faced challenges related to the acquisition, as BlackRock's latest markdown includes the brick-and-mortar coaching unit. The company’s consolidated loss for 2021-22 is estimated at about Rs 8,200 crore, with a significant portion attributed to the write-off of the Whitehat Jr subsidiary, acquired for $300 million in 2020.
Investors are demanding transparency and accountability, insisting that Byju’s produce its audited 2022-23 results before any new capital infusion. The company's struggle to pay staff salaries, coupled with the firing of 4,500 employees in September 2023, has led to heightened pressure on founder Byju Raveendran to step aside from day-to-day operations. This downward spiral raises questions about Byju’s ability to continue as a going concern, reflecting a stark reversal of fortunes for what was once India's most valued startup.