Why Did COVID Affect Oyo Valuation So Sharply?

I’ve been following the whole OYO roller coaster for years, and honestly, pinning down a single “current valuation” is tricky because it’s a private company and numbers shift with each funding or secondary transaction. Back in 2019 OYO reached that heady peak where the media and investor decks used figures around $10 billion. After the pandemic and a few rough quarters, everybody saw big markdown talk: fundraising rounds, investor notes, and secondary trades suggested much lower figures. Different outlets and databases have offered estimates ranging from low billions to values reportedly under $1 billion at various times, depending on what you count (post-money, enterprise value, or implied secondary prices). If you want the most recent, concrete snapshot, I’d check primary sources — recent press releases, filings if available, or reputable databases like PitchBook and Reuters coverage — because each round or liquidity event can change the headline number. Personally, I keep a small news alert and follow investor newsletters so I can spot the next update as soon as it drops.

This is a fascinating one — an IPO can be a real turning point for a company like OYO, and I love thinking aloud about what it practically does to valuation. First off, an IPO creates public price discovery in a way private rounds never do. I’ve watched companies that were once “unicorns” get re-priced either up or down once public investors can trade freely, and OYO would be no different. Going public tends to compress a lot of narrative uncertainty into one price: growth prospects, unit economics, margin improvements, and governance get baked into a market number. For fans of business drama (guilty as charged), that shift from private whispers to public scrutiny is half the fun and half the stress. An IPO also brings liquidity, and liquidity itself affects valuation. When early investors, employees, and founders gain a public market to sell into, some of the valuation premium that came from scarcity of shares can erode — but that’s offset if the market falls in love with the story. The size of the float matters: a small free float with big insider holdings can lead to volatile price swings, while a large float smooths things out and can attract institutional appetite. I pay attention to details like lock-up length and whether the IPO includes secondary shares; those determine how much selling pressure shows up after the debut. And then there’s the governance angle: listed companies face tougher reporting rules and activist scrutiny, which can lift valuations if investors trust management more after seeing audited numbers and stronger boards. If I try to sketch scenarios, there are three simple paths I keep imagining. In a bullish world where OYO shows clear improvements in margins, cleaner unit economics, and steady market share recovery, public markets could re-rate it to a premium versus late-stage private rounds — think higher multiples as confidence in sustainability grows. In a base case, the IPO brings modest uplift: better transparency and access to capital, but the valuation lands in line with comparable public hospitality/tech hybrids and investor caution keeps multiples moderate. In a downside case, weak macro sentiment, disappointing guidance, or continued cash burn forces a haircut; public markets are unforgiving if the path to profitability remains fuzzy. Personally, I look beyond headline revenue and focus on RevPAR trends, customer retention, and gross margin per property — those operational signals tell me whether the valuation uplift is justified or just hype. So what should you watch if you’re curious? Read the prospectus, check float size and lock-up expiries, and listen to the roadshow for how management frames profitability timelines. I’m planning to follow the IPO day pricing and the first earnings post-IPO closely; that’s when you really see whether public investors buy the narrative. If you like poking at spreadsheets and debate forum threads, this is a prime moment to dive in and form your own view — I’ll probably be bookmarking analyst notes and refreshingly honest Reddit threads while sipping coffee as the market decides.

Wow, the way SoftBank’s stake moved the needle on Oyo’s valuation feels like watching a dramatic anime power-up sequence — flashy, noisy, and with long-term consequences you can’t ignore. In my view, SoftBank’s investment initially acted as both a megaphone and an oxygen tank: the megaphone because their backing signaled to other investors that Oyo was a hot, scalable play, and the oxygen tank because the huge amounts of capital allowed Oyo to grow at breakneck speed. That combo typically inflates private valuations — other VCs tend to follow the lead investor, and when that lead is SoftBank’s Vision Fund, the market reads that as a validation that justifies higher price tags. So, Oyo moved from a popular startup to a multi-billion-dollar company on paper, largely powered by that confidence and cash flow that made expansion, hiring, and subsidies possible. But there’s another side to it I can’t shake: having such a dominant backer concentrated a lot of risk and painted a target on governance and sustainability issues. SoftBank’s style of deploying huge checks encourages aggressive unit economics trade-offs — scale over profit, fast partner acquisition, and lots of incentive programs. For Oyo, that meant rapid geographic and product expansion, but also messy relationships with hotel partners and strained margins. When the pandemic hit and macro conditions soured, those stretched fundamentals came into focus. Valuations that had been buoyed by optimistic growth projections started to correct, and the presence of a big SoftBank stake meant any markdowns were highly visible and painful. You could say SoftBank’s involvement turbocharged the valuation growth and then, indirectly, amplified the correction pressure when performance lagged. I also think about the signaling loop: later rounds and secondary trades often use previous lead rounds as anchors. If the lead investor later revalues the company downward or stops writing checks, it creates a strong negative signal. We’ve seen this pattern in other big SoftBank-backed stories like 'WeWork', where a combination of hype, big capital infusions, and weak underlying unit economics led to dramatic valuation swings. In short, SoftBank’s stake pumped up Oyo’s valuation through signaling and capital firepower, but it also contributed to a brittle structure that was vulnerable to market shocks and scrutiny — an exciting rise with a bumpy hangover, if you ask me.

Funny thing — following startup valuations sometimes feels like binge-watching a long-running anime where a character power-level skyrockets overnight and then gets nerfed by the plot. In the case of OYO, the peak of the hype cycle is usually pegged to the period right around late 2019 to early 2020. Most business press and investor chatter put OYO’s high-water mark at roughly the $8–10 billion range, with many reports coalescing around an approximate $10 billion valuation following a round of SoftBank-led investment and the company’s aggressive global expansion. That era was when OYO was snapping up markets, hiring rapidly, and making big distribution and tech plays — it felt like the company was on a meteoric climb and the headlines loved that kind of drama. Of course, valuations are messy things and depend on which source you read. Some outlets mention the high point in 2019 after multiple funding tranches, while others highlight January 2020 as the moment when the $10 billion figure was most commonly cited. What followed is a plot twist no one wanted: the pandemic hit hospitality especially hard, and OYO’s narrative shifted from growth-at-all-costs to crisis management, restructuring, and trying to reassure both partners and investors. Over 2020 and into 2021, the reported valuations dropped sharply compared to that peak — you’ll see numbers in various articles describing markdowns into the low billions, with rounds and investor notes showing a much more conservative picture than the heady pre-pandemic days. If you ask me, the bigger takeaway isn’t just the exact dollar figure at peak, but how fast startup stories can change and how external shocks rewrite the script. For a clearer timeline, it’s worth skimming a few reputable business pieces from late 2019 through 2021 that track SoftBank’s investments and OYO’s fundraising updates — those will give the precise dates and numbers that different outlets used. I always like comparing a couple of sources: investor filings, major financial press, and a founder interview or two because founders sometimes talk about marketed valuations versus post-money adjustments differently. Personally, I find it oddly comforting that even unicorns go through arcs that resemble my favorite series: rise, a dramatic low, and then a rebuilding phase — and honestly, it keeps the startup world interesting. If you want, I can point you toward a short reading list of articles that trace the timeline so you can see exactly how analysts pinpointed that peak period.

I got hooked on startup drama early, and OYO’s funding story is one of those roller-coasters that kept me checking the news at odd hours. Early seed and Series A rounds mostly bought them runway to prove the model — standard stuff: small checks, big hopes, valuation increasing modestly as they showed growth in room counts and revenue. Then came the mega-investments, especially from big players that signaled confidence to the market and pushed OYO’s valuation way up; suddenly it wasn’t just a local experiment, it looked like a global hospitality disruptor. But money isn’t magic. Each new round brought dilution, new governance demands, and pressure to scale faster. The SoftBank-era capital spiked valuation and financed rapid expansion and acquisitions, yet when growth metrics, unit economics, and then the pandemic hit, valuations were revisited and written down. Secondary trades and down-round-style negotiations later reflected a more cautious price. So funding rounds didn’t just change the headline number — they shifted strategy, board dynamics, employee equity value, and public perception in pretty dramatic ways for OYO.

When OYO announced rounds of layoffs, the first wave of reactions I saw felt almost like watching a slow-motion credibility test. Investors do not just price cashflows and growth curves — they price narrative. A sudden, large reduction in headcount signals two competing stories at once: either brutal, necessary course correction toward unit economics, or an admission that earlier growth metrics were overstated. I noticed immediate sentiment ripples: short-term panic from those who had backed aggressive top-line growth, cautious applause from those who had been pushing for profitability, and a loud chorus online debating governance and transparency. In the weeks that followed, my view shifted from raw emotion to pattern-reading. Layoffs tightened burn and gave management a better shot at hitting margin targets, which some late-stage investors rewarded by softening markdowns or stopping further dilution. On the flip side, secondary-market pricing and late-stage term sheets became more conservative because layoffs raised questions about demand durability, tech leverage, and founder control. For valuation, that meant two clear outcomes in my head: either a modest re-rating upwards if the company proved it could stabilize revenue per property and reduce churn, or a downward correction if the layoffs were perceived as patching over structural problems rather than fixing them. More practically, I started looking beyond the PR spin. Things that mattered to me were granular: month-on-month RevPAR, signed hotel partner churn, cash runway after severance, and whether management replaced lateral hires with better tech or simply reduced headcount. I also kept an eye on cap-table dynamics — whether new investors required board seats or governance changes, because that usually alters sentiment faster than any slide deck. Personally, I felt both wary and pragmatic: layoffs are painful and inevitably damage morale, but they can also reset expectations and attract a different cohort of investors focused on sustainable returns. If you’re tracking valuation sentiment, don’t just watch the layoffs themselves; watch the follow-up: transparency in communication, retention of core talent, and whether cost cuts translate into measurable improvements rather than temporary accounting relief.

I get a kick out of breaking down startup valuations, and revenue multiples are one of my favorite levers to play with because they feel so straightforward but hide a lot of nuance. At the simplest level, a revenue multiple is just the ratio investors are willing to pay for each unit of revenue — e.g., a 5x multiple on $100M in trailing twelve months (TTM) revenue implies a $500M valuation. But with a company like OYO, which sits between tech, travel, and hospitality operations, that simple math needs a lot of careful tuning. You can't just slap a SaaS multiple on it and call it a day; you have to ask what 'revenue' actually means, how predictable it is, and how much of the gross flows OYO actually keeps. Where it gets interesting: OYO's business mixes managed and franchised hotels, leased properties, and marketplace-like relationships with hotel owners. Some reported figures are gross bookings (total consumer spend) and some are net revenue (OYO's take-rate out of bookings). Investors should insist on the net metric when applying revenue multiples, because gross bookings can be enormous while OYO's retained revenue is a sliver. That retained revenue also varies by geography, seasonality, and contract terms with hotel owners. So if two companies both show $200M in 'top-line' but one is reporting gross bookings and the other is reporting net revenue, using the same multiple would be misleading. Adjustments for IFRS/GAAP recognition, refunds/cancellations, and voucher liabilities are also crucial — I always look at cash collected versus revenue booked. Beyond bookkeeping, multiples reflect future expectations. High growth, clear path to margin expansion, and strong unit economics justify higher revenue multiples. For OYO that means: improving average daily rate (ADR) and revenue per available room (RevPAR) without forcing unsustainable owner subsidies; raising the take-rate while keeping hotel partners satisfied; and lowering customer acquisition costs. If OYO can demonstrate repeatable payback periods for new markets and show EBITDA margins trending up, investors will place a premium multiple. Conversely, governance concerns, aggressive accounting, regulation, or weak unit economics push multiples down. Comparables are useful but imperfect — comparing OYO to 'Airbnb' or hotel REITs highlights model differences (marketplace vs asset-heavy), so you'd typically build ranges and apply discounts or premiums for risk and capital intensity. Practically, I build scenarios: pessimistic low multiple (reflecting high churn, low take-rate, regulatory risk), base case (steady growth, margin improvement), and optimistic (market leadership, better monetization). I also run sensitivity tables: how valuation changes if take-rate rises from 10% to 15%, or if cancellations fall by 20%. For anyone evaluating OYO, the main things I'd watch are the mix of net vs gross revenue, the trajectory of unit economics (RevPAR, owner share), and evidence that the company can monetize repeat guests without heavy subsidies. Those knobs are what move the multiple, and honestly, they tell the real story behind the headline revenue number — so I keep an eye on them in earnings calls and industry chatter, and they usually tip me off to whether a multiple feels justified or overly optimistic.

Okay, let me walk you through this in a way that feels more like chatting about a favorite series than a dry finance lecture — market comparables (comps) are basically the shorthand investors use to judge what OYO could be worth by looking at how similar companies are valued. At a high level, comps supply the multiples — think EV/Revenue, EV/EBITDA, price per room, or revenue per available room (RevPAR) — that become anchors for valuation. If public hotel operators and lodging platforms are trading at, say, 4x revenue or 12x EBITDA, investors will use those figures as a starting point to gauge OYO’s price tag, then tweak for differences in growth, margins, and risk. Comps are quick, market-driven, and particularly seductive during fast-moving rounds because they let people point to an external benchmark instead of arguing purely on first principles. When you apply that to OYO specifically, the nuance explodes. OYO’s hybrid business model — a mix of franchising, leases, and some managed properties — makes it harder to pick a clean peer set. Traditional hotel chains like Marriott or Accor emphasize owned/managed rooms with predictable margins, while asset-light aggregators or platforms like Airbnb (or regional players) operate very differently. So investors will often split the comparison into buckets: public hotel operators for asset-based metrics (price per room, RevPAR), tech-driven platforms for revenue multiples and growth expectations, and PE-backed local chains for deal multiples. Beyond that, unit economics matter: take rates (how much OYO keeps from gross bookings), customer acquisition cost, average length of stay, occupancy trends, and margin profile after incentives — all get normalized before you slap a multiple on OYO. If OYO’s RevPAR is lower but its growth rate is much higher, comps might justify a higher revenue multiple but a lower profitability multiple. Market comps also force adjustment for risk and timing. If the market is in a risk-on mood, travel multiples expand and OYO’s implied valuation can leap; in a downturn or after industry scares, comps contract and OYO gets hit harder than a company with steadier cashflows. Geographic spread matters too: OYO’s presence in India, Southeast Asia, and other markets brings regulatory and quality-control risk that Western peers don’t face, so investors often apply a country risk premium or a discount for operational complexity. Finally, liquidity and control premiums come into play — private rounds usually trade at a discount to public comps because of exit uncertainty and illiquidity, and minority stakes are priced differently than controlling deals. Practically speaking, if I were building a valuation for OYO today, I’d pick a few peer sets, normalize metrics (RevPAR, take rate, EBITDA margins), run best/median/worst-case multiples tied to growth and margin trajectories, and show sensitivity tables. I’d be explicit about why some comps are stretched (e.g., fast-growing pure-play marketplaces) and why others deserve a haircut (legacy hotel chains with lower growth). Comps will point you to a valuation band rather than a single number, and that band often becomes the bargaining room for term sheets. For anyone digging into OYO, my advice is to treat comps as conversation starters, not gospel — use them, adjust them honestly, and keep a close eye on unit economics and market sentiment because those are the levers that move the comps most dramatically.