The GoTo Slump Continues After Executives Fail to Persuade Investors

Shares of GoTo Group plunged after executives failed to reassure investors about its prospects.

The stock fell for a 15th straight day, hurt by the expiration of a lockup on its major shareholders’ stakes that freed them to reduce their holdings. In a meeting with investors on Thursday, management said it had sufficient funds to last until it reaches profitability, and that it was considering asset sales — comments that did little to halt the stock’s descent.

In Jakarta trading on Friday, Indonesia's largest tech company's shares dropped by 7% to 93 rupiah (less than 1 US cent). The company now has a market value of about $7 billion.

Nirgunan Tiruchelvam, an analyst at Aletheia Capital Ltd., said that the market is concerned that the measures they discussed yesterday, such as the disposal of assets, may not be enough to stem the cash leak. As a result of the lock-up expiry, the majority of shareholders are selling.

In the last seven months, GoTo's stock has declined by 72% since its debut in April. The ride-hailing and e-commerce provider faces increasing competition from rivals like Grab Holdings Ltd. and a deteriorating global economy. Aletheia said earlier this week that GoTo is six quarters away from a cash crunch, recommending investors sell the stock.

According to Alexander Yasa, an analyst at Sucor Asset Management, "people are hesitant to buy the stock because its book value is declining."

In response to mounting losses, GoTo announced last month that it would cut 1,300 jobs, or 12% of its workforce. As with many technology firms worldwide, GoTo faces stiffer competition, slowing economic growth, and heightened investor focus on profits. A recession may prompt customers to become more budget-conscious, leading to job cuts, business unit closures and other measures across the tech industry.

According to Tiruchelvam, GoTo may have difficulty gaining financing through options like selling more shares or issuing convertible bonds due to the tough market conditions.

In order to support the stock price after the company's initial public offering, early backers such as Alibaba Group Holding Ltd. and SoftBank Group Corp. were locked up for eight months, expiring Nov. 30. In an attempt to avoid a larger selloff at once, GoTo planned to facilitate controlled stake sales by pre-IPO backers.

GoTo raised $1.1 billion in one of this year's largest IPOs after merging ride-hailing provider Gojek with e-commerce firm Tokopedia.