The shares of Bloomberg GoTo Group went up after executives failed to address investor concerns about the unprofitable Indonesian internet company's prospects.
The stock fell for a 15th day after the end of a lockup on its major shareholders stakes freed it to reduce their holdings. In a meeting with investors on Thursday, management said it has enough funds to last until it reaches profitability and that it is considering asset sales - comments that did little to stop the stock's slide.
The shares dropped by 7% on Friday to a record low of 93 rupiah less than 1 US cent in Jakarta trading. Indonesia's largest tech company has a market value of $7 billion.
Nirgunan Tiruchelvam, an analyst at Aletheia Capital Ltd said that the market seems to be concerned that the measures they talked about yesterday, such as the disposal of assets, may not be enough to stem the cash leak. The lock-up expiry, which a large majority of shareholders were subject to, means that the investors that could sell are selling. Friday's decline left GoTo's stock down 72% since its April debut. The ride-hailing and e-commerce provider is facing a growing competition from rivals such as Grab Holdings Ltd. and a deteriorating global economy. Aletheia said earlier this week that investors should sell the stock, because of the fact that GoTo is about six quarters away from a cash crunch.
The long way to profit is the main concern, according to Alexander Yasa, an analyst at Sucor Asset Management. People are reluctant to buy because of the decline in book value, no matter how cheap the stock is. GoTo was cutting 12% of its workforce last month, or 1,300 jobs, after it lost 12% of its workforce. Like many technology companies, 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 imminent recession has resulted in job cuts, closures of business units and other measures across the tech industry.
The tough market conditions mean that GoTo may have difficulty gaining financing through options, such as selling more shares or issuing convertible bonds, according to Tiruchelvam.
Early backers such as SoftBank Group Corp. and Alibaba Group Holding Ltd. were held to an eight-month lockup on Nov. 30 to support the stock price after 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 biggest IPOs this year, thanks to the merger of ride-hailing provider Gojek and e-commerce firm Tokopedia.
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