GoTo Secures 5-Year Alibaba Cloud Partnership — Enough To Revive 80% Stock Decline?

Key Takeaways

• GoTo has reached a cloud agreement with Alibaba.
• As part of the deal, Alibaba has committed to maintaining its stake in GoTo.
• GoTo’s share price has declined by more than 80% since its IPO in 2022.

Since its initial public offering (IPO) in 2022, GoTo’s stock price has dropped by more than 80% as the company struggles to reach profitability. 

Indonesian tech giant GoTo, formed by the merger of eCommerce retailer Tokopedia and ride-hailing firm Gojek, has faced market headwinds as early investor Alibaba offloaded billions of shares over the past two years. However, in a new development, Alibaba has agreed to maintain its stake in GoTo in exchange for a 5-year cloud partnership.

Alibaba Partnership

Alibaba became one of GoTo’s largest shareholders through participation in Tokopedia’s Series F and G funding rounds.

Post-merger, the Chinese technology firm is second only to Japan’s SoftBank as one of GoTo’s largest shareholders. At the time of the IPO, Alibaba held roughly a 9% stake in the company. However, as of Aug. 31, it held  88.5 billion Series A GoTo shares, equivalent to 7.37%.

In a press release on Tuesday, Sept. 17, Alibaba said the new “expanded strategic partnership” represents a “commitment to GoTo as a long-term investor.”

But will it be enough to stabilize GoTo’s share price?

GoTo’s Stock Market Decline

While Tokopedia and Gojek have both become household names in Indonesia, turning market penetration into revenue has proven to be a challenge.

After posting losses of about $5.9 billion in 2023, GoTo booked its first quarterly profit in the year’s final three months and expects  to break even in 2024.

Such profitability worries and their impact on a company’s valuation are common in frontier technology markets. For example, Uber didn’t make a profit until 2023, and for much of the previous two years, it also traded below its IPO price. 

In addition to concerns about GoTo’s path to profitability, the firm has faced the added pressure of institutions selling their shares after the lockup period for early investors ended in November 2022.

Fierce Competition

One key factor distinguishing GoTo from Uber is that while Uber spent years and billions of dollars pre-IPO cementing its dominance in the ride-hailing market, it went public amid intense competition in the space.

In its native Indonesia, Gojek competes with Grab for market share, and the two firms are neck and neck in the race to be the top super app.

Meanwhile, although Tokopedia remains a titan of the Indonesian e-commerce sector, its market share has shrunk post-IPO  as it looks to cut costs in the name of profitability. It also faces growing competition from upstart rival Shopee.

Facing such challenges, GoTo finalized the sale of a 75% stake in Tokopedia to TikTok earlier this year. 

Selling Tokopedia helped GoTo cut losses and refocus on its more profitable segments. As the firm looks to build a sustainable, long-term business model, investors will watch closely to see whether it delivers.

About the Author

James Morales

Although his background is in crypto and FinTech news, these days, James likes to roam across CCN’s editorial breadth, focusing mostly on digital technology. Having always been fascinated by the latest innovations, he uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.

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