August 21, 2025 turned out to be a rough trading session for Ola Electric (Ola EIC) as its stock tumbled more than 8% in a single day, erasing a large chunk of the gains it had delivered in the past two sessions. The fall has reignited concerns among investors who had already been reeling under deep losses since the company’s much-hyped IPO last year.
In this detailed analysis, we look at what caused the sudden drop, why the stock rallied sharply over the previous two days, and what the road ahead looks like for investors.
From IPO Frenzy to Wealth Destruction
Ola Electric’s IPO hit the markets in August 2024 at an issue price of ₹76 per share. At its peak, the stock touched ₹157.4, more than doubling investors’ money. However, the rally was short-lived. Over the following months, the stock crashed to ₹39.7, wiping out nearly 75% of its market capitalization.
For investors who bought at higher levels, the pain has been significant. A ₹1 lakh investment at the peak declined to approximately ₹25,000. Even in 2025, Ola Electric shares have shown negative returns of about 42% year-to-date, despite some short-term rallies.
Why the Stock Crashed on August 21
Two key reasons explain Ola Electric’s sudden plunge after two days of blistering gains:
Profit Booking:
After rallying almost 30% in just two sessions from ₹39–40 levels to about ₹53, traders rushed to book profits. The stock had become overheated in a very short span, making a pullback inevitable.Weak Vehicle Registration Data:
Fresh data on EV registrations showed Ola lagging behind its closest competitor, Ather Energy.Ola Electric registrations (August 2025): 9,522
Ather Energy registrations: 10,248
Ather’s lead in registrations raised doubts about Ola’s market share and growth momentum, further fueling the sell-off.
Why the Stock Rallied Earlier This Week
The two-day surge before the crash was triggered by multiple factors, primarily driven by institutional buying and positive market sentiment:
Institutional Activity: Reports suggested that Helios Mutual Fund had picked up 1.33 crore shares of Ola Electric at levels around ₹54–55. This sparked hopes that smart money was re-entering the stock.
GST Reform Buzz: Expectations that upcoming GST changes could benefit EV makers, particularly Ola, created positive sentiment.
Vertical Integration Strategy: Ola’s management has emphasized building its own supply chain, including manufacturing 4680 Bharat lithium-ion cells and ferrite motors, reducing reliance on imports.
Battery Innovation: The company claimed its upcoming batteries would offer a 15-year life and 5x capacity, positioning it ahead of competitors.
AI & R&D Focus: Ola is also investing in AI-driven technologies and showcasing innovations like rare-earth-independent ferrite motors, which could reduce costs.
These narratives created what analysts call a “Lollapalooza effect” – when multiple positive triggers converge, driving investor excitement even if the fundamentals remain weak.
Financial Performance – Still in the Red
Despite the hype, Ola Electric remains a loss-making company:
Q1 FY26 Loss: ₹428 crore (down from ₹870 crore sequentially, but still higher YoY).
Revenue Decline: A steep 49.6% drop in revenues on a year-on-year basis.
Annual Losses: Ola has consistently reported losses of ₹1,500–₹2,000 crore over the last few years.
Currently, Ola trades at 4.2 times its book value, with a market capitalization of ₹21,573 crore – down nearly 70% from its peak.
What Should Investors Do?
For existing investors, who are already sitting on heavy losses, experts suggest holding on cautiously rather than panic selling at current levels. If institutional interest sustains and quarterly losses begin to narrow, the stock could recover gradually.
For new investors, analysts advise caution. Ola Electric remains fundamentally weak, with uncertain profitability timelines. The stock’s movements are currently driven more by news flow and speculation rather than strong financials.
Key levels to watch:
Resistance: ₹54–57 remains a crucial hurdle zone.
Support: ₹39–40 is an important support zone where buying interest has emerged recently.
Conclusion
Ola Electric continues to be a high-risk, high-volatility stock. While the company has ambitious plans in EV innovation, battery technology, and vertical integration, its financial performance is yet to show consistent improvement.
The August 21 fall highlights the dangers of chasing short-term rallies, especially in loss-making companies. Investors are better off keeping exposure limited, diversifying across stronger auto stocks, and closely tracking Ola’s quarterly results to see if losses begin to shrink sustainably.
Until then, Ola Electric remains more of a speculative bet on the future of EVs than a fundamentally sound long-term investment.
