GoTo shares are tipped for rebound after US$2.2 billion sell-off
The beaten-down shares of Indonesia's GoTo Gojek Tokopedia fail to reflect its ongoing profitability turnaround, according to JPMorgan Chase and Aletheia Capital. The e-commerce firm's financial discipline and buybacks also point towards the prospect of an upward re-rating, SGMC Capital said.
GoTo shares surged after going public in 2022 but then slid almost 90 per cent to their lows last year. The stock is down 14 per cent in 2025, the worst-performing tech company on the MSCI Asean Index, wiping out US$2.2 billion of market capitalisation in the process.
'Operationally, the company is on a sound footing,' said Nirgunan Tiruchelvam, head of consumer and Internet at Aletheia Capital in Singapore. 'It has done all the right things, but the market for some reason seems to have punished the stock.'
GoTo, which was formed via a merger of ride-hailing and food-delivery platform Gojek and e-commerce firm Tokopedia in 2021, reported its third straight quarterly profit on an adjusted basis in April as it cut costs and boosted sales. Adjusted earnings before interest, taxes, depreciation and amortisation, known as Ebitda, climbed to 393 billion rupiah (S$31 million), versus a pro forma loss of 101 billion rupiah a year earlier. Net revenue jumped 37 per cent.
One driver of the improvement has been GoTo's fintech business. The firm's digital wallet and lending unit saw revenue jump by 90 per cent year on year last quarter, with monthly transacting users rising to more than 20 million.
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GoTo's fintech 'scale and trajectory is just starting up' and will rival those of its competitors SEA and Grab Holdings in terms of momentum, said Mohit Mirpuri, a senior partner at SGMC Capital in Singapore. 'This could be the dark horse in South-east Asia's fintech race.'
Merger talk
Another source of upside for GoTo's shares is the potential merger with regional rival Grab. While Grab is weighing a takeover of GoTo at a valuation of more than US$7 billion, regulatory hurdles are considerable. Despite frequent denials, market chatter ratcheted up again last month when Grab's sale of convertible bonds fuelled speculation it was building up a warchest for the acquisition.
GoTo's 'current share price seems to have priced in a no-merger scenario and ignores the ongoing profitability turnaround of the business', Henry Wibowo, head of Indonesia research at JPMorgan in Jakarta, wrote in a research note last month. 'GoTo's share price is attractive at the current level and the recent pullback presents a good buying opportunity.'
'Limited upside'
Other analysts are more sceptical about any potential rally, especially after GoTo sold its Indonesian online shopping app to China's ByteDance in 2023.
'GoTo likely has a limited upside for now as it no longer has e-commerce business, and Grab is outgrowing it slightly,' said Kai Wang, a strategist at Morningstar in Hong Kong.
Much may hinge on GoTo's second-quarter results due this month. Investors will be looking for signs of further growth in the company's fintech business, progress on cost cuts from its decision to use the cloud services of Alibaba Group Holding, and any developments in the potential merger with Grab.
In the meantime, bulls are looking beyond the noise.
'I do believe there's room for a rebound even without a merger trigger, especially if the company continues to deliver on profitability, execution, and capital discipline,' SGMC Capital's Mirpuri said. 'The stock right now is caught between reality and rumour. I would just kind of strip out the headlines and focus on the business.' BLOOMBERG
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