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Tim Culpan and Andy Mukherjee

GoTo Is a Costly Ride, But It’s Going Somewhere

On the numbers alone, this IPO looks expensive. But investors may be willing to make a bet on Indonesia’s growing middle class and digital economy.

On the go.

On the go.

Photographer: Dimas Ardian/Bloomberg

The much-awaited debut of GoTo, the combination of ride-hailing app Gojek and e-commerce firm PT Tokopedia, offers investors a stark choice. Base your bet on near-term metrics like valuation and growth, or take a longer view of Indonesia’s growing middle class and digital economy. 

On the numbers alone, GoTo’s initial public offering looks expensive. Subtract the estimated $4 billion cash war chest from an expected debut market capitalization of $28.2 billion, and the mobility, e-commerce and financial services firm is on track for an enterprise value of around 10 times sales, based on a $2.4 billion revenue forecast for 2022 by Bloomberg Intelligence analyst Nathan Naidu. By comparison, e-commerce peers like Alibaba Group Holding Ltd. and Sea Ltd. average 2.6-times, while ride-hailing and delivery companies including Grab Holdings Ltd. and Uber Technologies Inc. sit at around 2.5-times.