Analysts told The Jakarta Post that the GoTo IPO was laden with risks, as overhyped investors might flock to buying up shares of the fundamentally unproven company by banking on its future growth.

GoTo posted a loss of Rp 7.59 trillion (US$528.37 million) in July 2021, down from the Rp 10.05 trillion loss it posted in July 2020, according to its IPO prospectus. The prospectus explicitly states that GoTo “cannot guarantee that the company will post a net profit in the coming future”.

Capital market analyst Edwin Sebayang, citing a financial projection made by one of the lead underwriters of the GoTo IPO, said the tech firm was estimated to book a loss of Rp 24 trillion in 2024.

“How will they [distribute] dividends if they are expected to post an Rp 24 trillion loss by 2024?” he said.

Through its IPO on the Indonesia Stock Exchange (IDX), GoTo aims to raise Rp 17.99 trillion, much less than the Rp 21 trillion Bukalapak raised through is IPO.

With each share priced between Rp 316 and Rp 346, GoTo aims to reach a market cap of between Rp 376.6 trillion and Rp 413.7 trillion to become the fourth largest publicly listed company on the local bourse after private lender BCA, state-owned Bank Rakyat Indonesia (BRI) and state-owned PT Telkom Indonesia.

GoTo’s public listing comes on the heels of the Bukalapak (BUKA) IPO, the first unicorn IPO in Southeast Asia, which raised a record $1.5 billion on the IDX.

Read also: Hype over Bukalapak IPO raises eyebrows

However, the BUKA IPO ended up as a dud after its share prices fell almost 70 percent since its IPO, with many retail investors losing their money by buying BUKA shares.

The IPO of GoTo archrival Grab also flopped as its share prices sank around 50 percent to date.

The shares of fellow tech companies like Singapore’s SEA Group, which owns Shopee, and the United States’ Meta Platforms, Inc., which owns Facebook, have also fallen 50 percent and 35 percent, respectively, signaling gloomy days ahead for tech companies.

 

Low share prices

Analysts also took issue with GoTo’s low share prices, which were less than half the prices of Bukalapak’s at Rp 850 apiece.

Avere Investama director Teguh Hidayat noted that GoTo’s offer of 1.5 trillion shares to reach its fundraising target was unusually large, saying that most initial offerings numbered in the billions.

“This method allows GOTO share prices to stay low, only [around] Rp 300, while its market cap can stay as high as possible,” he said.

Teguh added that GoTo share values benefited from last year’s equity jump to Rp 130 trillion from just Rp 20 trillion in 2020 as a result of goodwill transactions during the Gojek-Tokopedia merger, which racked up at least Rp 93 trillion in intangible assets.

GoTo had also arranged a greenshoe option to stabilize share prices up to a month after the listing. Teguh stressed that GoTo’s share prices might continue to fall after the first month.

Panin Securities analyst William Hartanto, who is also a founder of investment education platform WH Project, said investors should avoid buying shares based on fear of missing out (FOMO), as other investors would be exploiting the opportunity to sell for short-term gain.

He advised investors to make decisions based on share price movements instead of on projections of company fundamentals.

“It is better to see directly how the market responds. This will be much more realistic,” William told the Post.

Read also: GoTo to build up war chest through IPO amid fiercer competition

Despite analysts’ doubts, GoTo extended its book building period by three days to March 24 after receiving positive response from investors over the first four days since its IPO announcement on March 15.

GoTo underwriters Indopremier Securities and PT Trimegah Sekuritas Indonesia defended their client’s IPO plan.

Speaking at the IPO announcement on March 15, Indopremier managing director Moelonoto that the low prices of GoTo share were intended to make them as accessible as possible to investors, including GoTo users, merchants and partners.

At the same event, Trimegah managing director David Agus said the firm had accounted for all market factors and GoTo’s future prospects to determine the share prices.

“Looking at GoTo’s business and prospects, it's clear that investors should view this in the long term. The growth potential for the digital market in Indonesia is still huge,” he said.

Meanwhile, GoTo CEO Andre Soelistyo said the company would increase user and transaction volumes to increase its revenues from commissions and marketplace fees via product innovation and market penetration. At the same time, it would slash expenses by improving its logistics management and adopting machine learning.

“Therefore, revenue growth would be faster than the rise in expenses, automatically generating profit for our company,” he told the press conference for its IPO announcement.