Big changes are afoot in India’s ride-hailing sector, and they’re not good for one of its pioneering leaders. India’s one of the favorite startup, Ola, has had its value nosedive at the same time that it’s preparing for an initial public offering. Ola is primarily a mobility platform and ride-hailing service offering various transportation options like cabs, auto-rickshaws, and bikes.

Vanguard, the world’s second-largest asset manager, has valued Ola at a measly Rs 10,713 crore (around $1.25 billion) in its accounts, according to recent filings. That is an 80% decline from the ride-hailing service’s peak value of Rs 53,027 crore ($6.2 billion in today’s exchange rates) in 2021. It’s a genuine fall from grace!

For those following Ola’s footsteps, this is not the first instance that Vanguard has slashed the company’s worth. The saga between Vanguard and Ola’s worth has been rollercoaster-like since 2017. Despite owning under 1% of the company — a small part of Ola’s shareholders — its estimates of worth continue to count for a lot in finance. As early as 2016-17, Vanguard had already slashed the ride-hailing service‘s worth from an all-time high of $5 billion to a lower $3 billion. After that initial dip, Ola had to return to SoftBank and Ratan Tata’s RNT Capital for additional capital at a lower value to continue to compete with Uber for market dominance.

Ola should be praised to some degree since the company was able to recover from that first problem. Ola was funded in December 2021 by Edelweiss and IIFL at a valuation of $6.2 billion. The good times did not last, though. A new series of value cuts started in 2023, with Vanguard lowering the value to $4.8 billion in May. The cuts continued in 2024, and the value dropped again to $2 billion. Now, with this new review, the value of the ride-hailing service has dropped to almost a quarter of what it was a couple of years ago.

As the old saying goes, “when it rains, it pours,” and Ola is truly experiencing a rough patch at the moment. This sudden dip in value comes at a poor time for the firm, which has been attempting to list. To add insult to injury, the ride-hailing service has been losing ground in the market that it created in India. In the ride-hailing space (cabs, auto-rickshaws, and bikes included), Ola has fallen from number one to number three. Rapido is now the market leader, with Uber in second position. For a firm that previously dominated India’s ride-hailing market, this loss of top position is a significant reversal of fortune.

Last August, CEO Bhavish Aggarwal announced a rebranding of Ola Cabs to Ola Consumer. This change was meant to bring different business areas together, such as financial services, cloud kitchens, and electric logistics. The ride-hailing service became a public company in November 2024 and has been looking at IPO options since November of the year before. However, clear steps toward entering the market are still not happening. Market analysts think that Ola will likely delay its IPO plans for at least six months because of bad market conditions. The falling market value and share price of Ola Electric, another project led by Aggarwal, have made things more complicated.

Ola’s finances show a mixed trend. In the financial year 2024, the company’s operating revenue fell by 5.5% to Rs 2,012 crore from Rs 2,128 crore in FY23. But here’s some good news: The ride-hailing service drastically reduced its losses to just Rs 10 crore in FY24, a big improvement from the Rs 623 crore loss in the previous year. The Bengaluru-headquartered company also became profitable in EBITDA in FY24, a silver lining in a year of negative news.

Meanwhile, while the ride-hailing service is struggling with its worth, its competitor Rapido is thriving. The company, backed by Swiggy, became a unicorn company last year after raising $200 million at a valuation of $1.1 billion. More importantly, Rapido surpassed Ola in the number of daily rides for bike taxis, auto-rickshaws, and cabs during the second quarter of FY25. This shift in who tops the market illustrates how rapidly competition can shift in the high-speed world of ride-hailing services.

Although the ride-hailing service is no longer the market leader in market share, its ride-hailing business still generated more revenue than its competitors. In FY24, Ola generated Rs 1,761 crore from ride-hailing, which is more than twice Uber’s Rs 807 crore from its Indian services. Rapido generated Rs 648 crore in the same period and managed to reduce its losses by 45% to Rs 371 crore. These figures indicate that although Ola may be losing in terms of ride volume, it still generates a lot of revenue in the Indian ride-hailing industry.

Vanguard’s downgrade of Ola’s valuation will not necessarily affect the company’s finances in the short term, but it will hurt the company’s morale. This is a worry because Ola is considering listing on the public markets. The abrupt reversal of Ola’s fortunes is definitely keeping investors nervous, especially those who invested at higher valuations with hopes of a profitable IPO exit.

Critics cite several reasons that could be responsible for the ride-hailing service‘s current troubles. As with most new businesses, Ola’s office culture is reported to be ruled by the CEO’s moods, constant changes in strategy, and stringent deadlines. Such an environment can make a business grow rapidly in the short term but can lead to trouble in the long term. As the old Wall Street saying goes, “The market can stay irrational longer than you can stay solvent.” Ola may be discovering it the hard way.

A decline in valuations by investors is generally not something to celebrate. It indicates that individuals have less faith in a company’s future and finances. Other popular startups, such as Byju’s, have also experienced similar declines in valuations and have struggled with large financial and operational issues. Now, everyone wants to know whether Ola will experience the same or manage to turn things around.

Will the fortune of Ola suffer the similar fate of Byju? Only time will tell.

The path forward for the ride-hailing service appears challenging. With increasing competition, loss of market share, and falling investor hopes, CEO Bhavish Aggarwal and his team have their task cut out. The proposed IPO, which was to be Ola’s coming-of-age ceremony, now hangs in the balance. Prospective investors will scrutinize the company’s financials and growth potential very closely, particularly after Vanguard reduced its valuation.

For Ola to be great again, it might have to get back to its core business of ride-hailing and address the issues that the critics have highlighted. The venture into electric vehicles by the company in the form of Ola Electric was meant to be significantly significant, but that initiative too has encountered some problems. Perhaps returning to what they do best, with fresh innovative ideas and not switching gears repeatedly, would serve the ride-hailing service through this tumultuous period.

In the volatile startup world, fortunes can shift in an instant — for better or worse. Tomorrow’s top company can be today’s struggling company, and vice versa. Although the ride-hailing service‘s current situation appears precarious, it is too early to write off a company that has shown resilience in the past. There are numerous successful companies that have been in the same position and emerged stronger.

As we watch this drama unfold, one thing is certain: Ola’s response to this money crisis will be a pivotal moment in its company’s history. Will it turn into another cautionary tale like Byju’s, or will it manage to turn itself around and become a leader in India’s ride-hailing industry again? Only time will tell whether this one-time successful startup can weather these trying times and hold on to its dreams of an IPO. For now, at least, the prognosis is that there will be tougher times ahead for Ola.