Bukalapak’s share price a warning to GoTo, Traveloka?

When Bukalapak became Indonesia’s first unicorn to go public, its share price soared almost 25% on its first day – only for it to decline afterward.

This isn’t strange, of course. US tech companies like Lyft and DoorDash, for instance, had similar experiences on their stock market debuts.

But when Bukalapak unveiled a positive earnings report less than a month later, the stock price barely budged. Many mainstream publications pointed out that the company was still unprofitable – even though its revenue grew by 35% while losses decreased.

Media reports, however, are unlikely to have an outsized impact on stock prices, says Angus Mackintosh, an analyst at CrossASEAN Research.

“I think this reflects that the [mainstream] media don’t necessarily understand the models being pushed out of [the tech industry],” he adds.

What this may also indicate is that tech stocks are a relatively new phenomenon for the Indonesian public – whether for retail investors or the media. Investors on the Indonesia Stock Exchange (IDX), who are accustomed to backing traditional companies, may have a dimmer view on firms that sacrifice immediate profit for future growth.

As several Indonesian tech unicorns gear up for their own local initial public offerings (IPOs), this problem may become more relevant.

Investors divided

The influence of mass media, online forums, and social networks shouldn’t be underestimated, though, if the experiences of some retail investors are any indication.

Nunki Pangaribuan tells Tech in Asia that she is not adept at reading financial statements. She relies on various online sources, as well as a WhatsApp group created by a salesperson from the stockbroker Mirae Asset Sekuritas, for investing decisions.

In the end, Pangaribuan listened to the online chatter not to buy BUKA shares (Bukalapak’s ticker symbol on IDX).

“The price-to-book value was too high,” she adds, referring to the ratio of the company’s share price and its assets on the balance sheet.

However, this ratio is another example of a divide between conservative and future-focused retail investors. At its IPO price, Bukalapak’s price-to-book (PB) ratio was at 36.5x. Anton Hermansyah, a technical stock analyst at Korea Investment and Securities Indonesia, wrote on his blog that for conservative investors, a PB ratio of over 10x is considered overpriced.

The ratio is not necessarily applicable for Bukalapak. For some future-oriented investors, 36.5x is a fair price for a tech company that could grow exponentially.

Bukalapak’s fate isn’t sealed – yet