Cafe Coffee Day, A Bitter Taste
The stock of Café Coffee Day fell sharply today on the terrible news of its founder V G Siddhartha committing suicide.
It is a gut-wrenching news for his family, the employees of Coffee Day and of course, the investors of the company.
The stock was locked in the lower circuit (20% down) and by all possible means, it would continue to see panic selling in the days to come.
I sincerely request everyone who is thinking of buying the stock of Coffee Day to stay away from this falling knife.
Every year we have instances like this when stock falls through the cliff and there are people desperately buying the shares in the hope to double (or triple) their money in a few days.
Don’t get me wrong: there are always a few lucky ones who get it right but the majority of investors who indulge in this knife catching lose their money and then blame the stock market to be risky.
The troubles of Coffee day have just begun. The company was surviving barely as it is but now, with the champion of the company gone, it will have a real hard time raising funds and staying operational.
And the company was primarily a promoter driven company- in the absence of whom, the company will have basically be a rudderless boat.
In all likelihood, Coffee Day would be sold to some Private Equity (PE) firm when the stock reaches attractive valuations but no one knows what those levels are and when/if there would be such a deal.
So, my short advice is: stop gambling your money away with Coffee Day and do something else.
On the personal front, I researched about V G Siddhartha a few months back when I was trying to understand L&T’s hostile takeover plan of Mindtree.
One of things that absolutely amazed me about him was his humbleness. He was instrumental in incubating Mindtree from its inception and always supported the core team through thick and thins.
The surprising part of that in spite of being the biggest shareholder of Mindtree at the time, he never claimed any management control over the company. He just trusted the management to take care of business and didn’t want to create unnecessary distractions.
He stuck around with Mindtree when most of the original founders reduced their stake in the company. This shows his sincerity towards the organization and the spirit of entrepreneurship. However, when things started going worse financially, he eventually had to sell his shares out of sheer desperation.
He struck me as a man who followed his heart and his instincts.
In his last note to employees of Coffee Day, he said that he had “failed as an entrepreneur”. I don’t think he failed- he accomplished more in life than most of us can ever dream of. Only, if he would have persisted a little longer, I wonder if things would have turned out differently.
V G Siddhartha’s departure is a loss to not just his family and the investors of Coffee Day but also to the nation at large.
May his soul rest in peace.
– VRD Rao
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Cafe Coffee Day, A Bitter Taste
The stock of Café Coffee Day fell sharply today on the terrible news of its founder V G Siddhartha committing suicide.
It is a gut-wrenching news for his family, the employees of Coffee Day and of course, the investors of the company.
The stock was locked in the lower circuit (20% down) and by all possible means, it would continue to see panic selling in the days to come.
I sincerely request everyone who is thinking of buying the stock of Coffee Day to stay away from this falling knife.
Every year we have instances like this when stock falls through the cliff and there are people desperately buying the shares in the hope to double (or triple) their money in a few days.
Don’t get me wrong: there are always a few lucky ones who get it right but the majority of investors who indulge in this knife catching lose their money and then blame the stock market to be risky.
The troubles of Coffee day have just begun. The company was surviving barely as it is but now, with the champion of the company gone, it will have a real hard time raising funds and staying operational.
And the company was primarily a promoter driven company- in the absence of whom, the company will have basically be a rudderless boat.
In all likelihood, Coffee Day would be sold to some Private Equity (PE) firm when the stock reaches attractive valuations but no one knows what those levels are and when/if there would be such a deal.
So, my short advice is: stop gambling your money away with Coffee Day and do something else.
On the personal front, I researched about V G Siddhartha a few months back when I was trying to understand L&T’s hostile takeover plan of Mindtree.
One of things that absolutely amazed me about him was his humbleness. He was instrumental in incubating Mindtree from its inception and always supported the core team through thick and thins.
The surprising part of that in spite of being the biggest shareholder of Mindtree at the time, he never claimed any management control over the company. He just trusted the management to take care of business and didn’t want to create unnecessary distractions.
He stuck around with Mindtree when most of the original founders reduced their stake in the company. This shows his sincerity towards the organization and the spirit of entrepreneurship. However, when things started going worse financially, he eventually had to sell his shares out of sheer desperation.
He struck me as a man who followed his heart and his instincts.
In his last note to employees of Coffee Day, he said that he had “failed as an entrepreneur”. I don’t think he failed- he accomplished more in life than most of us can ever dream of. Only, if he would have persisted a little longer, I wonder if things would have turned out differently.
V G Siddhartha’s departure is a loss to not just his family and the investors of Coffee Day but also to the nation at large.
May his soul rest in peace.
– VRD Rao
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