Does GoTo deserve to trade at 6x Grab’s valuation?

GoTo, Grab, and PropertyGuru – some of Southeast Asia’s pioneering tech companies – went public just as the stock market cycle turned and tech stocks suffered precipitous declines. Bukalapak, another peer, listed before things went south but has since been hit hard.

No surprises then that the performance of these companies’ shares since listing has fallen far short of initial expectations.

Of the four, GoTo’s investors have been the most fortunate. Shares of the Indonesia-based super app are down by only 4% from their IPO price, unlike the 51% to 75% declines for investors in the other three companies.

To be sure, this placid result overlooks the roller-coaster ride that GoTo’s shares experienced after its IPO. The stocks plunged by almost 50% to a low of 194 rupiah on May 13 before recovering to their current level.

However, long-term investors who held on through the trough can boast that their holdings have retained their value.

Trading at 6x premium to peers

Yet when Tech in Asia dove deeper into the financials of the companies, we found that the market appears to be attaching a significant premium to GoTo’s valuation compared to its Southeast Asian peers.

The market capitalization and price-to-sale valuations of these companies are set out below.

What stands out is GoTo’s price-to-sales ratio. At 84.7x, this is a whopping 6x the median of the group.

What could be the reasons for this premium? Perhaps the fact that GoTo is listed in Indonesia has reduced its exposure to the carnage of the US equities market. Year to date, the Nasdaq is down 29% while the Indonesia Stock Exchange is up by 1.5%.

It’s also possible that investors prefer GoTo’s single-country focus, compared to the regional – or indeed global – aspirations of its peers.

But the valuation of ecommerce player Bukalapak, which is also listed in Indonesia and operates only in that country, suggests that there is another explanation for GoTo’s outsize valuation.

Bigger revenue ahead

One possibility is future revenue growth. The stock market is forward-looking, and the current share price already incorporates future expectations. 

Paulus Jimmy, Deputy Head of Research at Sucor Sekuritas, tells Tech in Asia that Tokopedia hasn’t been monetized to the same level as its competitors. “I believe that GoTo has room to increase its monetization, and thus increase its revenue,” he adds.

Weakest EBITDA and cash position

Fewer institutional shareholders

Limited upside?