GoTo’s rollercoaster share price bucks downward trend, analysts diverge on its prospects

Two months after its IPO, GoTo Group’s share price is nearly unchanged from where it started. The Indonesian super app’s closing price of 386 rupiah last Friday, June 10, is slightly above the 382 rupiah it closed at on April 11, its first day of trading.

However, this masks what has been quite a rollercoaster ride for GoTo shareholders. Following its listing, shares plunged by almost 50% to a low of 194 rupiah on May 13, which was also a Friday. Yet that unlucky date seems to have marked a bottom for the share price, at least for now. Since then, GoTo is up almost 100%, which brings it back to where it began.

Notwithstanding this volatility, those who held on were lucky – investors who panicked and sold near the bottom would have suffered significant losses. Perhaps this will serve as a lesson for them to adopt a longer-term approach in the future.

Analysts are divided and unsure of where the stock price is headed in the months ahead. However, they agree that price movement should be tied to the company’s ability to demonstrate a path to profitability.

Could GoTo run out of cash in two years?

GoTo went public amid a complicated backdrop: the ongoing US-China economic conflict and the war between Russia and Ukraine. In May, the US Federal Reserve announced a major hike in interest rates to fight inflation. Investors remain worried about general global economic conditions, including inflation and rising food and energy prices.

“It pushes investors to be more risk-averse, with less liquidity all around. Nothing we can do about that,” says Angus Mackintosh, founder of CrossASEAN Research.

These concerns affected not only GoTo’s shares, but also those of other Southeast Asian tech companies such as Sea Group and Grab.

But certain investors tried to make a quick buck from the IPO process, according to Hans Kwee, director of investment management firm Ekuator Swarna Investama. That’s why when prices rose to 416 rupiah just minutes after GoTo’s market debut, many investors took profit and sold right away, driving the price back down.

GoTo Group CEO Andre Soelistyo / Photo credit: GoTo Group

GoTo was prepared for some selling pressure. As Tech in Asia previously reported, the company activated a greenshoe option that allowed its broker to support the share price by purchasing shares from the public at the offer price of 338 rupiah.

However, the funds available for this ran out in a couple of weeks, and the share prices proceeded to nosedive far below the IPO price.

“We can’t fight against the market for too long,” Kwee observes.

This raises the question of whether future tech IPOs should even bother with such a greenshoe option. On a more fundamental level, Mackintosh thinks that the discussion about GoTo being overpriced still makes investors worried. The fact that the company posted a US$450 million loss in the first quarter of this year doesn’t help, either.

Potential to create a unique ecosystem

Public markets still open, provided valuations make sense?