ShareChat is gasping for breath. The Bengaluru-based social media unicorn’s financial state tells a sad tale of cash burn that has not brought in the expected revenue bump with a slew of failed monetisation models, questionable strategies and failed acquisitions.
Against a revenue of INR 540 Cr in FY23, ShareChat posted a whopping loss of INR 4,064 Cr led by increased finance, server costs, employee payouts and other expenses.
Part of the loss is also because the company wrote off its investment in the short video platform MX TakaTak, which it acquired from Times Internet 2022. While reports initially suggested the deal value to be around $700 Mn, however, as per ShareChat’s filings, the deal was valued at around INR 1,838 Cr ($221 Mn).
While TakaTak was eventually merged into ShareChat’s short video app Moj for a combined user base of 250 Mn users, the acquisition seems to have had no positive impact on ShareChat.
TakaTak’s acquisition was aimed at strengthening Moj’s position in the burgeoning short video app landscape, but since then, many of the platforms (such as Trell and Chingari) have pivoted to other models. Instagram and YouTube cornered the short video market share after TikTok’s ban and exit from India.
However, two years after the deal, ShareChat reported INR 816 Cr as impairment costs for its investment in FY23. This amount was paid as a cash consideration during the TakaTak acquisition, while the remaining consideration was in the form of convertible debentures.
This is yet another dud acquisition for ShareChat which has suffered the same problem on its primary social media business.
The write-off indicates that TakaTak has lost most of the value that ShareChat paid to acquire it. And sources tell us that Moj’s fate also hangs in the balance as the core advertising revenue stream has seen a massive decline.
Moj’s user retention has also hit a wall as seen by plummeting engagement data and as indicated by multiple sources with knowledge of the development.
Inc42 sent a detailed questionnaire to ShareChat pertaining to the recent write-off of TakaTak acquisition, Moj’s revenue challenges, the dwindling user base and its strategy for survival and profitability ahead. The company declined to comment.
Funding Crunch Bites Moj
Times have been hard for ShareChat since early 2023 when it saw a number of key exits (more on this later).
Last year, we reported that ShareChat is in the process of raising $60 Mn through convertible debentures at nearly half the valuation ($2.8 Bn) of its previous round in 2022. Sources now tell Inc42 that investors are negotiating an even lower valuation of about $1.5 Bn for this round.
Whatever the valuation, this infusion will be critical for ShareChat to salvage Moj, and without this infusion, the short video app is on life support, sources told us.
“As far as Moj is concerned, ShareChat nearly spent $500 Mn-$600 Mn in building its short video platform. However, Moj’s valuation is not........