GoTo Group shares fell the highest on record after one of its co-founders reduced his interest in a share sale, raising fears about the company’s growth prospects in a South-east Asian industry bellwether.
The largest technology business in Indonesia had a drop of up to 19.4% on Monday when William Tanuwijaya said that he had sold 332 million shares of the company late on Friday, bringing his ownership stake down to 1.72% from 1.77%.
GoTo reduced its losses and dropped by roughly 9% in late morning session.
The announcement was made at the same time that a private placement comprising up to 17.05 billion additional shares was completed.
Monday’s closing price for GoTo shares was lower by 1.5%.
The company was created in 2021 from the merger of the two most valued start-ups in Indonesia: the ride-hailing behemoth Gojek and the e-commerce company Tokopedia.
GoTo has taken a beating from investors this month as worries about the market climate in its two core companies—ride hailing and e-commerce—grew. These industries are plagued by consistently low consumer demand and fiercer competition.
Up until Monday morning, GoTo had lost approximately US$1.5 billion (S$2.1 billion) across at least five losing sessions. The company was impacted by foreign fund outflows from its home nation, and as a result, the shares are down more than 70% from their November high.
According to JPMorgan analysts’ Monday report, some investors saw the private placement as a warning sign of a pressing need for financing.
After the government outlawed e-commerce on social media, which hurt ByteDance’s TikTok but also raised concerns about how it views Internet innovation, there is also uncertainty around Indonesia’s regulatory climate.
Analysts, including Henry Wibowo, stated in a brief research note that there is a misconception that the Non-Preemptive Rights Issue is perceived as a sign of weakness, retaining an overweight rating on GoTo.
After halting some of the bleeding in the second quarter, GoTo lowered its 2023 loss prediction in August, moving it closer to its objective of turning a profit following a period of expensive expansion.
Since taking over as CEO in June, Patrick Walujo has continued the effort started by his predecessors to reduce losses through employment cuts, reduced promotional spending, and tighter expense controls.
The Indonesian company is attempting to create cash following years of rapid development, much like rivals Grab Holdings and Sea.