After a 70% slump in its stock price, Bloomberg GoTo Group said it has enough funds to last until it reaches profitability, trying to alleviate investor concerns about its financial health.
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Chief Financial Officer Jacky Lo told investors in an online meeting that our balance sheet is sufficiently healthy to take us to profitability. He said that the Indonesian internet company expects to be able to speed up its breakeven timeline, curb expenses and is considering selling non-core assets.
Early backers were free to reduce their holdings because of the lockup on its major shareholders stakes at the end of November. The ride-hailing and e-commerce provider is facing competition from rivals such as Grab Holdings Ltd. and a deteriorating global economy. Aletheia Capital recommends investors sell the stock, because GoTo is about six quarters away from a cash crunch.
GoTo said last month that it shaved 12% of its workforce, or 1,300 jobs, because of its losses. Like technology companies worldwide, GoTo is facing the effects of stiffer competition, economic slowdown and heightened investor focus on the bottom line. The risk of customers becoming more budget conscious in the face of an impending recession has resulted in job cuts, closures of business units and other measures across the tech industry.
We will continue our disciplined approach to reducing operating expenses, which we are confident will result in continuous improvement in our cash burn, Lo said. We may consider severing some of our non core assets and investment portfolio and we will not make any new investments that do not contribute to an acceleration of our profitability. The stock dropped by 6.5% to 100 rupiah in Jakarta trading – close to the daily limit, leaving it down 70% since its April debut. Indonesia's largest tech company now has a market value of $7.6 billion.
Early backers, such as SoftBank Group Corp. and Alibaba Group Holding Ltd., were held to an eight month lockup until November 30 to support the stock price following the company's initial public offering. GoTo's plan to facilitate controlled stake sales by pre-IPO backers - aimed at avoiding a bigger selloff at once - didn't come to fruition.
GoTo raised $1.1 billion in one of the largest IPOs this year thanks to the merger of ride-hailing provider Gojek and e-commerce firm Tokopedia.
With help from Yoolim Lee, Norman Harsono, Soraya Permatasari and Yudith Ho.
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