Just last month, the firm announced it retrenched 12% of its workforce.
Indonesian internet company GoTo Gojek Tokopedia PT Tbk (IDX: GOTO) has seen a continuous and consistent drop in its shares as investor sentiments grow bearish across the board. After a 7% stock price drop to IDR 93.00, GoTo Gojek has now effectively shed off as much as 60% of its value from November and by over 70% since it went public.
GoTo Gojek is notably one of the major casualties of this year’s economic downturn. The company’s woes were compounded following the expiration of its shares lockup period for major investors. With such expiration historically known to fuel a massive downslide in the value of the shares they represent, GoTo Gojek’s investors do not want to be caught in the crosshairs of a massive sell-off.
The company’s Chief Financial Officer, Jacky Lo has tried to wade off concerns from investors in an online presentation on Thursday. At the event, Lo assured that the firm has very healthy financials as demonstrated in its contribution margins which increased in the third quarter. According to him, GoTo Gojek’s balance sheet is “sufficiently healthy.”
The assurances did little to wade off the concerns of investors, underscoring the general bearish sentiment that mainstream tech firms have been facing around the world. As things stand, Lo said the company will be left with no choice but to sell off some assets, while cutting costs in order to break even.
GoTo Gojek Stock Rated Poorly by Aletheia Capital
Just last month, the firm announced it retrenched 12% of its workforce, a number that came in at 1,300 as it made efforts to position itself for the harsh economic outlook it faces ahead. Per the current outlook, investors are very bearish on the stock, and Aletheia Capital head of consumer and internet Nirgunan Tiruchelvam has placed a sell rating on the company’s stock.
According to Tiruchelvam, the company may soon be running out of money as it has continued to touch deep into the $2 billion cash it has at hand after its establishment. These funds according to the market analyst will only last a few more quarters as the business model GoTo Gojek represented is highly capital intensive.
“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.”
Tiruchelvam maintained it will be difficult for the company to really garner additional funding because of the fears of further devaluation which will neither be good for the company nor the prospective investors in the long run. These compounding woes made Tiruchelvam give the company an 80 IDR price target.
Despite its current challenges, GoTo Gojek can be tagged as a success story, spun off as a merger of ride-hailing giant Gojek and e-commerce firm Tokopedia. The company was one of the biggest in the country at the time, and the founder’s optimism remains high to reclaim this better day.
next