Home News Tech

GoTo assures investors it has enough cash to reach profitability

Bloomberg
Bloomberg12/10/2022 01:04 AM GMT+08  • 2 min read
GoTo assures investors it has enough cash to reach profitability
Shares of GoTo have suffered as a lockup on its major shareholders’ stakes expired at the end of November. Photo: Bloomberg
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

GoTo Group said it has enough funds to last until it reaches profitability, trying to alleviate investor concerns about its financial health following a 70% slump in its stock price.

“Our balance sheet is sufficiently healthy to take us to profitability,” Chief Financial Officer Jacky Lo told investors in an online meeting on Thursday. The Indonesian internet company expects “to be able to accelerate” its breakeven timeline, will curb expenses and is considering selling non-core assets, he said.

Shares of GoTo have suffered as a lockup on its major shareholders’ stakes expired at the end of November, freeing early backers to reduce their holdings. The ride-hailing and e-commerce provider faces intensifying competition from rivals such as Grab Holdings Ltd. and a deteriorating global economy. GoTo is about six quarters away from a cash crunch, Aletheia Capital said, recommending investors sell the stock.

GoTo said last month it’s cutting 12% of its workforce, or 1,300 jobs, after its losses mounted. Like technology companies worldwide, GoTo is confronting 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 triggered 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 sequential improvement in our monthly cash burn,” Lo said. “We may also consider divesting some of our non core assets and also investment portfolio and we will not make any new investments that do not contribute to an acceleration of our profitability.”

See also: Intel tumbles after forecast suggests comeback is far off

The stock plunged by 6.5% to 100 rupiah (0.87 cents) 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 about US$7.6 billion ($10.3 billion).

Early backers such as Alibaba Group Holding Ltd. and SoftBank Group Corp. were held to an eight-month lockup expiring Nov 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.

Formed via a merger of ride-hailing provider Gojek and e-commerce firm Tokopedia, GoTo raised US$1.1 billion in one of this year’s largest IPOs.

×
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.