Sharma described a two-part process that he claims defines the market. First, an IPO is completed at an unjustifiably high valuation. Second, the stock inevitably collapses post-listing.

“The stock will fall… 50%, 60%, 80% as we have seen,” Sharma said, citing the performance of new-age tech companies like CarTrade, Nykaa, Zomato, and Paytm as prime examples.

According to Sharma, the “nub of the problem” lies in the flawed analysis that follows the crash. He argued that investors, anchored to the initial high IPO price, view the 80% drop as a bargain rather than assessing the company’s fundamental worth at its new, lower valuation.

“Nobody asks if at 25 thousand crore, it is still worth it. Everything gets anchored at the IPO price,” he explained.

Sharma concluded with a cynical view of the market mechanism, calling it “the way capitalism works.’

“It’s a beautiful little game. I love it. That’s the way capitalism works. The millions and billions of small investors coming in. Someone has to extract money from them, so these IPOs come and take money from you,” he concluded.