GoTo, the combined entity resulting from the merger of Gojek (an Indonesian ride-hailing player) and Tokopedia (an Indonesian e-commerce company), raised around $1.1 billion (IDR15.8 trillion, per the company) in its public-market debut on the Indonesia Stock Exchange (IDX) earlier this month. GoTo most recently raised a $1.3 billion round in late 2021, in what was then described as pre-IPO funding.
GoTo’s IPO can be considered a success, pricing shares at 338 Rupiah apiece and trading as high as 442 Rupiah, per Yahoo Finance data. GoTo has given back some gains since its opening trades, but is still worth more per share than where it priced. The company most recently closed at 358 Rupiah, off a little more than 5% in its most recent trading session.
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The IPO market is moribund across the globe today, most notably in the United States, where many technology companies have historically listed. GoTo initially detailed interest in dual-listing, but ultimately decided to only list on the Indonesian exchange.
Given the generally glacial global IPO climate and the fact that GoTo managed to float without sinking, The Exchange got curious. This morning, let’s explore the company’s financial performance and resulting multiples.
From there, we’ll consider its market of choice as we work to better understand how it seems that no high-growth tech company can go public in the United States, but a mammoth listing in the less-busy Indonesian market was feasible.
Financials
At the time of the merger of Gojek and Tokopedia, the company reported a combined gross transaction volume (GTV) of $22 billion in 2020. It was already a large concern, in other words.
More recently, the company said that in the 12 months concluding September 30, 2021, it accreted $28.8 billion in total GTV. That’s growth, if not rapid growth from a platform spend perspective.
Leaning on Deal Street Asia’s summation of GoTo’s anticipated results sourced from a document “created for investors,” the company expected to scale from 3.328 trillion Rupiah ($231.7 million) in 2020 net revenue to 6.258 trillion Rupiah ($435.8 million) in 2021. Looking ahead, estimates for the company push its net revenue number to 10.696 trillion Rupiah ($744.8 million) in 2022.
Today, GoTo is valued at 424 trillion Rupiah, per Yahoo Finance data. That works out to a market cap of $29.53 billion. From a very loose multiples perspective, the company is valued at a forward (2022) net revenue multiple of just under 40x, a number that is far from cheap.
Are investors bonkers to pay so much for GoTo stock?
Well, the same digest from Deal Street Asia notes that the company expects to reach 18.246 trillion Rupiah worth of net revenue in 2023, or some $1.27 billion. At that result, GoTo becomes a far cheaper stock, worth some 23x its revenues.
But 2023 is far out in the future, meaning that GoTo is simply not cheap. A Bloomberg analysis of the company that used gross revenue figures instead of net revenue metrics (we used the more conservative metrics, but you can run the numbers as you prefer) came to a similar conclusion, noting that “the mobility, e-commerce and financial services firm is on track for an enterprise value of around 10 times sales, based on a $2.4 billion revenue forecast for 2022 by Bloomberg Intelligence analyst Nathan Naidu.” That figure was contrasted with far cheaper multiples posted by other Asian e-commerce concerns.
Even in the mobility business, Uber’s price-sales multiple, per Yahoo Finance, is in the single digits, while Grab’s is around 18x, according to the same source. Grab’s richer multiple than what the U.S. ride-hailing company presently sports provides some space to argue that GoTo should enjoy a higher multiple than Uber, but doesn’t make a large enough quibble to fully explain why GoTo is priced as it is.
It’s worth noting at this juncture that different stock market exchanges have different valuation profiles; tech companies outside the U.S. haven’t merely chosen the Nasdaq or NYSE over the years for their names, but also for the fact that listing in the United States can mean higher valuations than could be secured in other markets.
Regardless, did GoTo’s choice to list domestically help it secure a price that, so far as we can tell, is far from inexpensive?
The dual-listing question
GoTo would only have been one company among many to list in the U.S. (Though maybe not these days!) But going public in Indonesia is a whole other story.
As Bloomberg recapped, GoTo’s exit is Indonesia’s third-largest IPO on record. The two larger debuts both happened in 2021, when Bukalapak and Mitratel went public, with respective approximate proceeds of $1.5 billion and $1.3 billion – considerably larger amounts than previous IPOs in the country.
At the time of Bukalapak’s record IPO, our former colleague Jon Russell, now a VC, wrote that the operation was opening the gates for others to follow suit, so GoTo listing in Indonesia is not exactly a surprise.
However, GoTo could have opted for a dual listing, going public in the U.S. and Indonesia at the same time. In November 2021, it even stated that it was its intent – but the plan was clearly abandoned, and this was likely for the best for GoTo.
In its home turf, GoTo benefits from being a part of everyday life. According to Nomura Research, quoted by the Wall Street Journal, “it has served a quarter of Indonesia’s population, partnered with more than 2.5 million drivers and 14 million merchants across the archipelago.”
Mainstream awareness doesn’t always translate into IPO pops, but GoTo built a bridge by giving shares to 600,000 drivers – a regional first, according to Bloomberg. The company also took advantage of multiple voting shares being allowed, a change Indonesia in late 2021 introduced to favor tech IPOs.
The simple fact that Indonesia was taking measures to favor IPOs while the public exit climate was simultaneously cooling elsewhere helps explain why GoTo was ready to take a gamble.
“Going public in Indonesia first wasn’t as glamorous as heading to the U.S., but the big bet is that local relevance, brand and pride can beat out the economics of U.S. public markets,” Russell summed up.
Looking back, GoTo’s IPO was “certainly not a home run” – Bloomberg’s words. But the simple fact that it wasn’t a failure is more than noteworthy in the current global context, which has us accustomed to high volatility and uncertainty. This has led many companies to wait for more favorable times. GoTo wasn’t one of these.
As a final note, Brazilian fintech company Nubank went public in late 2021 on both its domestic exchange and in the United States. The company traded as high as $12.24 per share before falling to $7.11 today, so perhaps a dual listing amid a U.S. market that’s chilly toward new debuts is in fact a net negative.
We’ll need more data to truly make that claim, but the GoTo IPO points to a world in which Asian companies don’t have to plan a trip to New York to get a public market valuation that makes others green with envy.