Innovation Is the Key for GoTo to Survive

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GoTo Group CEO Andre Soelistyo speaks at a ceremonial share listing ceremony at the Indonesia Stock Exchange (IDX) building, Jakarta, Monday (11/4/2022).

JAKARTA, KOMPAS — Indonesia’s leading technology giant PT GoTo Gojek Tokopedia Tbk (GoTo) formally listed its shares on the Indonesia Stock Exchange (IDX) on Monday (11/4/2022).

GoTo is expected to continue to improve its performance to quickly become profitable. In addition to continuing to innovate, GoTo also needs to improve the quality of its ecosystem for existing products, namely transportation, e-commerce, and financial technology, to grow its market.

According to its initial public offering (IPO) prospectus, GoTo, formed last year through the merger of on-demand digital services company Gojek and e-commerce platform Tokopedia, booked a net loss of Rp 11.58 trillion (US$807 million) at the end of September 2021, up from losses of Rp 10.43 trillion during the same period in 2020. The company had total assets worth Rp 158.17 billion and loss per share of Rp 197, less than Rp 365 per share in the same period last year.

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On its IDX debut, the price of GoTo shares was Rp 380 and then jumped to Rp 412 just 5 minutes after the opening of trade at 9 a.m. GoTo shares closed with Rp 384 at the end of the trading day. The company’s IPO share price was set at Rp 338, with total market capitalization of Rp 400.3 trillion.

He expressed the hope that GoTo would be able to maintain its performance and have a positive impact on the local stock market.

Speaking on the sidelines of an event to mark GoTo’s market debut, IDX assessment director I Gede Nyoman Yetna said that the company should immediately realize its strategic plan, continue to innovate and maintain accountability. He expressed the hope that GoTo would be able to maintain its performance and have a positive impact on the local stock market.

"GoTo is the 15th company listed in 2022 and the 781st listed company since the IDX was established. GoTo's shares listing was highly anticipated because it is an important milestone for the company and the capital market. GoTo, a start-up company with a value of $10 billion, is the first decacorn listed on an Asian exchange," he said.

Josua Pardede, chief economist at PT Bank Permata, shared Gede’s view. According to him, technology companies engaged in the e-commerce sector, such as GoTo, must continue to innovate in order to increase their take rate, or the fee a marketplace charges for facilitating transactions on its platform. With a higher take rate, the company’s profitability would grow.

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(left to right): GoTo Director Kevin Aluwi, GoTo Group President Patrick Chao, GoTo President Director Andre Soelistyo, and GoTo Commissioner William Tanuwijaya during the official ceremony to become a public company on the Indonesia Stock Exchange, Monday (11/4/2022).

"However, when raising the take rate, a company must also take into account their competition with other companies that engage in e-commerce," said Josua.

Competition

In a study titled “Indonesia's Leading Super App”, Ahmad Maghfur Usman, an equity research analyst at Nomura, said GoTo still had growth opportunities, as average consumer spending on e-commerce

platforms remained relatively low. GoTo should use this opportunity to help accelerate growth of online shopping in Indonesia, he added.

Regarding its ompetition, Ahmad said, GoTo had to compete with Grab and Sea Limited, which were already listed on the stock exchange, adding that both competitors were currently focusing on pursuing short-term profitability.

“GoTo needs to invest more to expand its market share. GoTo's revenue growth must exceed the gross transaction value [GTV] by gradually increasing tariffs and reducing incentives," said Ahmad.

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Meanwhile, capital market analyst Kuntho Priyambodo at Nusantara Investama observed that almost all IDX-listed companies booked a sharp increase in their share price on their market debut.

To calculate fair value of a company’s share price, Kuntho said, would take at least six months or until after it had passed the lockup period, the period when investors and insiders were not allowed to sell shares of a company that had become publicly listed.

He said that there was no right time for an IPO, while GoTo's IPO had been planned for a long time.

In his remarks at the IPO debut ceremony, GoTo Group CEO Andre Soelistyo acknowledged that many people questioned why GoTo decided to list its shares amidst unfavorable global macroeconomic conditions, such as the Russia-Ukraine war. He said that there was no right time for an IPO, while GoTo's IPO had been planned for a long time.

“Our strategy is to list on the IDX because our focus is the Indonesian market. Despite the uncertain global macroeconomic conditions, the Indonesian economy is still good. For example, domestic consumption is still rising and the rupiah exchange rate is still stable. We did have a plan for a dual listing, but the plan has not been realized yet and we are looking at market movements,” said Andre.

Gojek CEO and GoTo director Kevin Aluwi said that some proceeds from the IPO would be used to expand its business in Singapore and Vietnam, where Gojek also provided ride-hailing services. According to the plan, GoTo would also expand its e-commerce and financial technology in the two countries.

"Our advantage is in the broadness of our services [product ecosystem]," said Kevin.

KOMPAS/RADITYA HELABUMI (RAD)

Gojek and Tokopedia officially announced a merger agreement through the formation of the GoTo Group on Monday (17/5/2021). Gojek is an on-demand and financial service platform, while Tokopedia is a marketplace technology company in Indonesia.

In addition to GoTo executives, the listing ceremony was also attended by a number of ministers and officials, including Communications and Information Minister Johnny G. Plate, Coordinating Economic Minister Airlangga Hartarto, Transportation Minister Budi Karya Sumadi, incumbent Education, Culture, Research and Technology Minister and former Gojek CEO Nadiem Anwar Makarim, and Financial Services Authority (OJK) chairman Wimboh Santoso. (MED).

(This article was translated by Hendarsyah Tarmizi)