GoTo Group plummeted its most on record after one of its co-founders trimmed his stake in a share sale, spurring concerns about the business prospects of a Southeast Asian industry bellwether.
(Bloomberg) — GoTo Group plummeted its most on record after one of its co-founders trimmed his stake in a share sale, spurring concerns about the business prospects of a Southeast Asian industry bellwether.
Indonesia’s biggest tech firm plunged as much as 19.4% Monday after William Tanuwijaya disclosed he unloaded 332 million shares of the company late on Friday, reducing his slice of the company to 1.72% from 1.77%. GoTo trimmed losses and was down about 9% in late morning trade. The disclosure coincided with the completion of a private placement involving as many 17.05 billion new shares.
Investors have pummeled GoTo this month after concerns mounted about the market environment in its main businesses of ride-hailing and e-commerce, dogged by stubbornly weak consumption and intensifying competition. GoTo has shed roughly $1.5 billion of value over at least five losing sessions up to Monday morning. The shares are down more than 70% from their November high, after the company was hit by foreign fund outflows from its home country.
Some investors regarded the private placement as a warning about an urgent need for capital, JPMorgan analysts wrote Monday. There’s also uncertainty over the regulatory environment in Indonesia, after the government outlawed e-commerce on social media, a move that dealt a blow to ByteDance Ltd.’s TikTok but also raised questions about its approach to internet innovation.
“There is some misperception that the Non Preemptive Right Issue is seen as a sign of weakness,” analysts including Henry Wibowo wrote in a brief research note, maintaining an overweight rating on GoTo.
Read more: Indonesia’s GoTo Cuts Loss Forecast as Cost Curbs Pay Off
GoTo in August cut its 2023 loss projection after staunching some of the bleeding in the second quarter, taking it closer to a goal of getting into the black after an era of costly expansion.
Patrick Walujo took over as chief executive in June and is now carrying out his predecessors’ campaign to shave losses by cutting jobs, curbing promotional spending and tightening expense controls. Like rivals Grab Holdings Ltd. and Sea Ltd., the Indonesian firm is trying to generate cash after years of rapid growth.
–With assistance from Olivia Poh.
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