GoTo IPO Busy Looking For Positive Tones
GoTo’s stock, which started the initial offering in mid-March 2022, seems hectic. The complexity of the GoTo IPO stock has occurred before the company’s public expose. The victims are retail investors who are confused so is this a prospect stock or not?
The GoTo IPO plan has indeed surfaced since the end of 2021. Many problems began to emerge from there, such as claims for using the GoTo name to the copyright for the online motorcycle taxi concept from a person claiming to be the originator of online motorcycle taxis.
After announcing a more detailed IPO timing, GoTo was accused of using a buzzer to buy its shares. However, GoTo firmly explained that they did not use the buzzer service.
Apart from that, netizens are still focused on the achievement of GoTo, which is still experiencing a significant net loss. The value investing group feels that GoTo buyers are the great fools in the stock market, while their opponents have yet to respond.
If I recap, four other facts make this GoTo IPO stock the most complicated IPO in Indonesia, not even globally. How come?
GoTo’s efforts to look positive
GoTo shares set an IPO price of IDR 338 per share from the range of IDR 316-IDR 346 per share.
Reportedly, the demand for GoTo shares during book building reached IDR 15.75 trillion. Assuming the highest IPO price, Goto’s target fund could raise IDR 17.99 trillion. Then, if it is calculated using the final IPO price of IDR 338 per share, if all claims sell well, it means that GoTo can raise IDR 17.57 trillion in funds.
Then, why did book building only sell for IDR 15.75 trillion? Do different price submissions cause it? If you want to calculate it, it will be fixed with an IPO price of IDR 338 per share. That way, GoTo’s IPO shareholder during Book Building was only 89.61 percent of the total shares released to the public.
Public investors can still absorb GoTo’s remaining IPO shares of around 5.4 billion, equivalent to IDR 1.82 trillion. In your opinion, are Indonesian retailers interested in absorbing that many shares during the IPO?
In addition, three facts are worrying, but they are used as positive narratives.
First, all of GoTo’s IPO shares were entirely absorbed by domestic investors. Foreign investors are not interested, and the big players are reduced. Can domestic investors close positions that foreign investors usually occupy?
Second, GoTo’s book building is optimal amid the war conditions between Russia and Ukraine and the increase in interest rates by the Federal Reserve (The Fed). Here, it means that GoTo did the IPO not at the right time, right?
Third, investors should not immediately say that there are no enthusiasts because the process of ordering GoTo shares has not ended. The public offering will continue until early April 2022. So, later there will be additional orders from retail investors.
Can retail investors be able to buy the remaining GoTo IPO share quota of IDR 1.8 trillion? This IDR 1.8 trillion assumption is taken from the difference between all shares released multiplied by the price of the IPO determination minus the rumored value of interested parties during book building.
Greenshoe Scheme, Stable Price Guarantee?
One of the highlights of GoTo’s IPO shares is the stock price stabilization feature after the IPO with the Greenshoe scheme. For investors in the Corona generation, greenshoe maybe something new.
Several IPO shares have been using the Greenshoe scheme in Indonesia since the government divested its shares in PT Bank Negara Indonesia (Persero) Tbk.
Most recently, Deputy Minister of BUMN Kartika Wirjoatmodjo also suggested that every BUMN IPO use the Greenshoe scheme so that incidents such as PT Dayamitra Telekomunikasi Tbk. (MTEL) does not happen again. The question is, can the greenshoe secure the stock price? If so, how long can it take?
Greenshoe Schematic Explanation
The greenshoe scheme is not a rights issue, namely the issuance of new shares after the IPO. So, there are two stages in the greenshoe scheme: the option of more allotment and price stabilization.
More allotment options occur when the demand for shares exceeds the quota. Issuers can issue more allotment options from treasury shares or founding shareholders ready to release their ownership. So, the underwriter can offer more allotment options to 100 investors. Later, only a maximum of 50 investors will be able to get this more allotment.
If all of them sell out, the issuer will get IPO funds plus the option of more allotment. Now, the proceeds from the more allotment option will be used to stabilize stock prices for 30 days after the IPO.
Here, we enter into the second stage, namely price stabilization. If the stock price drops below the IPO price, the stabilization agent from the securities party can buy shares with maximum funds from the results of the over-allotment option. The buying action for price stabilization is also limited to a maximum equivalent to the IPO price.
The Greenshoe Problem That Became a Question Mark
Before going to the question so is whether greenshoe can stabilize stock prices after the IPO, it turns out that there are several other problems. Some of these issues include the problem if the IPO does not record excess demand to the impact on the number of stabilization funds that can be used.
Who will buy the more allotment option if the IPO is oversubscribed?
Historically in Indonesia, from the whole provisions of the allotment option of more than 15% of the total IPO shares issued, IPO stock that used greenshoe only realized an average below 10%. The problem here is that GoTo shares did a jumbo IPO. How can the price be maintained if the price stabilization funds are limited?
In other words, the answer is whether the greenshoe can stabilize stock prices after the IPO? In the case of GoTo, this may not necessarily be the case, so don’t expect too much with a scheme that is said to be able to secure share prices after the IPO.
Moreover, IPO shares can only stabilize prices 30 days after the IPO. That way, the IPO share price after 30 days has the potential to fluctuate relatively high according to market mechanisms. Finally, this proud greenshoe scheme only sweetened the performance of the IPO shares in the early trading period.
As suggested by Tiko, as Kartika is called, the Deputy Minister of BUMN asked state-own enterprises to conduct an IPO with green shoes. The goal is to make the image of BUMN IPO shares look good.
Shadows of Trap Technology Stock in Bukalapak
Before that, it needs to be clarified that Bukalapak is not a competitor to GoTo. The businesses of the two differ significantly in type and scale. If Bukalapak and Grab merge later, it might be more similar.
However, the GoTo IPO was indeed affected by the poor performance of Bukalapak’s shares. How not, from the IPO price of IDR 850 per share in August 2021, Bukalapak’s share price as of March 25, 2022, is IDR 308 per share. The position was down 60 percent from the IPO price level.
The collapse of Bukalapak’s IPO at a loss made the assumptions of old-economy stock lovers come true. The prospect of losing stock is very bleak. Finally, when the GoTo prospectus appeared and still lost, the response was, why buy shares that are still losing?
On the other hand, the GoTo IPO has little defense because the issuer has an application that many people use. In contrast to Bukalapak, which has few e-Commerce users and only a lot of partner stalls. So, there was a question to Bukalapak, are there still people who use Bukalapak?
Outside of the Gojek and Tokopedia applications being used more, there is still a sentiment that GoTo is still at a significant loss. The condition of GoTo, which is still losing money, recalls the incident during the Bukalapak IPO in August 2021. The question arises, do you still want to buy IPO shares that are still losing?
Plus, the prices of Asean technology stocks such as Grab and Sea Ltd. are also battered. Grab, which just completed its IPO with the SPAC scheme at the end of 2021, its share price continues to decline.
Likewise, the shares of Sea, Shopee’s parent company, continued to decline after recording a significant increase in share prices in 2019–2020.
Technology Stock Facts During IPO
Stocks in this technology sector are like antiques, unattractive if you look at them. However, when someone values it exorbitantly, millions of people immediately FOMO to buy it.
Facebook’s shares, which offered an IPO price of US$38 per share and were listed on May 21, 2012, had fallen below the IPO price for more than a year. At the end of 2013, Facebook’s share price began to climb above the IPO price. Facebook is also using the greenshoe scheme, but its IPO was when the Fed wanted to taper off.
Tapering off is reducing the purchase of government bonds by the Fed. As a result, the money supply can slow down. Before the interest rate hike, the policy was a monetary tightening measure, so it became a negative sentiment for technology stocks.
Not only Facebook, Sea Ltd., the parent company of Shopee and Garena. Sea Ltd. With an initial offering price of 15 US dollars per share, the IPO was below the IPO price for up to 2 years.
In mid-2019, Sea’s shares began to rise with the release of the game Free Fire, which was quite popular.
The current situation is different from the Amazon IPO period. You could say that the company created by Jeff Bezos did its IPO at the right time, namely when internet companies were booming until they became a bubble that burst in 2000.
Conclusion
Honestly, GoTo’s complicated efforts to create a positive narrative at this time will be in vain. The sky and the gods are not there to support GoTo’s stock price to stay above the IPO price.
Unless Patrick Walujo’s team, part of Northstar, who was also an early Gojek investor, intervened in this IPO.
Historically, stocks under Northstar and Patrick have performed very well. For example, PT Bank Tabungan Pensiun Nasional Tbk. (BTPN) after being acquired by TPG Patrick, its share price skyrocketed.
Likewise, several other stocks, such as PT BTPN Syariah Tbk. (BTPS), PT Delta Dunia Makmur Tbk. (DOID), PT Bank Jago Tbk. (ARTO) and others.
The stock price doesn’t suddenly rise without a big moment, so don’t expect GoTo’s stock price to skyrocket to auto-rejection (ARA) in volumes like PT Adaro Minerals Tbk. (ADMR). However, it is clear that the rise in the entire stock price also had a big moment.
I said GoTo’s IPO shares are very complicated, meaning that efforts to make the issuer’s tone positive will be in vain. Of course, the current negative sentiment is stronger than the positive. This means that GoTo’s stock price pressure could be even more substantial in the future.
Agree or not?
