GoTo’s early backers can expect very healthy returns indeed — but it makes you wonder what’s next.
As noted here last week, GoTo Group has been given the green light to publicly list its shares in an initial public offering (IPO) worth up to $1.1 billion.
Also read: GoTo Receives Approval for $1.1B IPO
That IPO, Bloomberg reported Wednesday, would mean the value of shares held by Alibaba and SoftBank would be as high as $5 billion.
But beyond the headlines and beyond the fact that a new FinTech is coming to market, there is a risk (although it always is) that enthusiasm will wane, as has happened with so many FinTech brethren going public went.
As PYMNTS has shown, the IPO FinTech Tracker is down 20% by the end of the first quarter.
And of the more than 40 names represented in the index, the average listing is more than 20% below the IPO price.
Busted or not?
That’s not to say that GoTo will inevitably join the ranks of failed IPOs. But there’s no denying that we’re in a different environment now, where investors are quick to shoot first and ask questions later.
Grab might be the most visible example, at least in an effort to forge the super app, especially in Southeast Asia. This company went public late last year and opened at just over $13. The stock closed at $3.59 on Wednesday.
We’ll hear more about Grab’s fortunes in the coming weeks as the company announces earnings for the quarter that just ended in March. But as per the latest report, in the three months ended December, the company’s revenue fell 26% to $4.5 billion, while gross merchandise value (GMV) rose 44% to $122 million. The company has also spent money to attract drivers by spending more on commissions.
So we could say that the super app crown could be worn by the company that can keep up the momentum even as it strives to cobble together ride-hailing and grocery delivery and financial offerings.
In at least one way, Grab mirrors some of the ecosystems being forged by other companies like Alipay and WeChat Pay – ie not with the messaging or the gaming, but with the eCommerce in play. Tokopedia is a distinguishing feature here.
In details released by the company last month, GoTo estimated that its ecosystem contributed 2% of Indonesia’s GDP and its services provided covered two-thirds of the country’s household consumption.
Pro forma gross transaction value of $28.8 billion for the 12 months ended September 30 represents approximately $1 billion in revenue for the same period. The company estimates that its Total Addressable Market (TAM) for on-demand services is expected to grow from approximately $5.4 billion in 2020 to approximately $18 billion in 2025.
It’s no given that GoTo’s stock will be sailing smoothly post-IPO, with uninterrupted hockey stick growth up and to the right. But the tussle with Grab (and with Sea and with others) will be a key factor to watch.
——————————
NEW PYMNTS DATA: WHY CONSUMER PATIENT PORTALS BECOME TABLE INSERT
About: Patient portals are now a must for healthcare providers – so much so that 61% of patients interested in using the tools say they would switch to a healthcare provider that offers one. For Accessing Healthcare: Easing Digital Frictions In The Patient Journey, a collaboration between PYMNTS and Experian Health, PYMNTS surveyed 2,333 consumers to learn how healthcare providers can alleviate digital pain points to improve patient care and satisfaction.
Comments are closed.