GoTo’s IPO numbers split opinions, but investors may warm to share price

It has finally arrived.

After much behind-the-scenes work and some delays, Indonesia’s biggest tech company, GoTo Group – the new entity formed after the merger of Gojek and Tokopedia – has detailed plans for its April 4 IPO on the Indonesia Stock Exchange (IDX).

Its prospectus, released earlier this week, lays out some headline numbers. The company is set to raise almost 18 trillion rupiah (around US$1.3 billion), with an implied valuation range of US$26.4 billion to US$28.9 billion.

GoTo Group CEO Andre Soelistyo / Photo credit: GoTo Group

That said, GoTo’s numbers are inevitably compared with peers like Bukalapak and Grab. After high-profile IPOs in 2021, both companies have since struggled in the public markets – Bukalapak’s share price has decreased almost 70% from its IPO price (as of Wednesday), while Grab’s market capitalization has also seen a dramatic drop.

Nirgunan Tiruchelvam, head of consumer equity research at Tellimer Research, views GoTo’s almost US$29 billion valuation to be “extravagant,” but some think that the company is taking a more realistic approach. For example, valuations aside, GoTo’s IPO price is less than half of Bukalapak’s, points out Nailul Huda, a digital economy researcher at the Institute for Development of Economics and Finance (INDEF) in Jakarta.

Angus Mackintosh, founder of CrossASEAN Research, says that even without the sharp fall in Grab’s share price, assessing the implied valuation of GoTo in isolation is a difficult task: opinions would differ depending on which valuation method is used. Still, he considers GoTo’s business to be “good and growing.”

“It’s an IPO, so they don’t give many forward-looking statements. But from what I’ve seen, they are projecting quite strong growth,” says Mackintosh. The valuation is “not going to be cheap.”

Valuation conundrum

Bukalapak has not exactly set a great precedent for other tech companies looking to list on the IDX.

After becoming the first Indonesian tech unicorn to list on the exchange with its US$1.5 billion IPO in August 2021, the company has witnessed its price continue to fall as investors see no immediate sign of profit. As of Wednesday, Bukalapak’s shares were trading at 260 rupiah apiece – almost a 70% decrease from its IPO price.

With GoTo being a loss-making tech firm as well, some retail investors may conveniently compare it with Bukalapak. Indeed, INDEF’s Huda points out that high valuations have not proven to optimally raise stock prices.

“This is due to the lack of understanding [among retail investors] of the future value of technology companies and not necessarily their current financial situation,” he says.

Bukalapak’s office / Photo credit: Bukalapak

Exciting exit for early investors