Advertisement
Skip to Content
Global News Select

GoTo Gojek's Shares Hit Lower Limit Despite CFO's Assurance of Corporate Health

By Yi Wei Wong

 

Shares of Indonesian internet company GoTo Gojek Tokopedia fell sharply Friday, even after the company had tried to reassure investors they had sufficient cash to reach profitability despite the stock's weak performance over the past few weeks--following the expiration of a lock-up period on the company's shares.

The internet technology company's shares fell to the 7.0% lower limit at 93.00 Indonesian rupiah ($0.01) in morning trade. The shares have fallen 63% since Nov. 30, when the lock-up period for its major shareholders expired, and by more than 70% since the company's initial public offering.

In an online presentation Thursday, Chief Financial Officer Jacky Lo told investors that GoTo was well on the path to profitability, pointing out that various metrics such as the group's contribution margins had improved in the third quarter and that the company's balance sheet was "sufficiently healthy."

The company will consider selling non-core assets and curbing expenses to break even, Mr. Lo said.

In November, the company said in a release that it would cut 1,300 jobs, or 12% of its total workforce, in a bid to cut costs amid an uncertain economic outlook.

GoTo is also considering a plan to conduct a private placement by releasing 118.43 billion shares, or 10% of the company's issued and paid up capital, it said Thursday. The company obtained approval from shareholders to go ahead with the private placement on June 28.

Aletheia Capital head of consumer and internet Nirgunan Tiruchelvam initiated coverage on the stock at a sell rating and at a target price of IDR80, adding that as the company has only $2.0 billion of net cash after its listing, it could run out of money by the fourth quarter of 2023 due to its high working capital-requirements.

The company's options to raise more capital could also prove increasingly difficult, as it wouldn't make sense for investors to invest in GoTo's stock given its recent declines, and a private placement for existing shareholders would require the company to place shares at a discount, he said in a phone call.

"The end of the lock-up exposes its valuation and financial frailties," Mr. Tiruchelvam wrote in a note, adding that any plans for GoTo to issue equity next year "will be dilutive and challenging."

Compared with other Southeast Asian technology peers, such as Grab Holdings Ltd. and Sea Ltd., GoTo's cash flow is relatively weak, which means it is "likely to run out of steam in the three-way ASEAN tech battle," he said.

Formed from the merger of ride-hailing company Gojek and e-commerce firm Tokopedia, the company raised $1.1 billion during its debut in April, in what was one of the largest IPOs in Asia in 2022.

 

Write to Yi Wei Wong at yiwei.wong@wsj.com

 

(END) Dow Jones Newswires

December 08, 2022 23:17 ET (04:17 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.

Market Updates

Our Picks