GoTo Group shares continued their plunge after executives failed to assuage investor concerns about the unprofitable Indonesian internet company’s prospects.
The stock fell for a 15th straight day, hurt by the expiry of a lockup on its major shareholders’ stakes that freed them to reduce their holdings. Management held a meeting with investors on Thursday in which it said it has enough funds to last until it reaches profitability and that it’s considering asset sales — comments that did little to halt the stock’s slide.
The shares dropped by 7% on Friday — the daily limit — to a record low 93 rupiah (0.81 cents) in Jakarta trading. Indonesia’s largest tech company now has a market value of about US$7 billion ($9.49 billion).
“The market seems to be concerned that the measures they talked about yesterday such as the disposal of assets may not be enough to stem the cash leak,” said Nirgunan Tiruchelvam, analyst at Aletheia Capital Ltd. “The lock-up expiry, which a vast majority of shareholders were subject to, means that the investors that could sell, are selling.”
Friday’s decline left GoTo’s stock down 72% since its April debut. The ride-hailing and e-commerce provider faces intensifying competition from rivals such as Grab Holdings Ltd. and a deteriorating global economy. GoTo is about six quarters away from a cash crunch, Aletheia said earlier this week, recommending investors sell the stock.
“The main concern is the long way to profit,” said Alexander Yasa, an analyst at Sucor Asset Management. “No matter how cheap the stock is, people are reluctant to buy because its book value continues to decline.”
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The tough market conditions mean that GoTo may face difficulties in gaining financing through options such as selling more shares or issuing convertible bonds, Tiruchelvam said.
Formed via a merger of ride-hailing provider Gojek and e-commerce firm Tokopedia, GoTo raised US$1.1 billion in one of this year’s largest IPOs.
