GoTo: Sells E-Commerce Unit Tokopedia; Despite Loss of Upside, Risk Is Significantly Reduced

We are increasing our fair value estimate for GoTo to IDR 78 from IDR 63 previously after the company sold off its e-commerce unit Tokopedia to TikTok on Dec. 11. We view GoTo’s e-commerce platform as a loss-making business with limited visibility and its profitability was burdened with heavy cash burn. The 20% decline in GoTo shares after the announcement likely reflects market sentiments of the loss in upside from selling its e-commerce business and disappointment that GoTo will no longer be its majority shareholder. However, we view the transaction differently and the increase in our valuation reflects that GoTo will no longer incur significant cash burn from Tokopedia and can now reach profitability in 2025, from 2027 in our model as we also removed the operating and corporate expenses that are associated with the e-commerce unit. Despite the loss of upside from the selloff, we believe this should allow GoTo to better allocate its resources and save on corporate costs and marketing expenses in the long run, which should put the company in a better position to run its on-demand business. Essentially, we believe GoTo is cutting its losses on the e-commerce platform to better manage its risk, so it can reach profitability.