Gojek stock is an interesting story of a business that starts small, tries to cover a specific market niche and adds value for people by solving daily problems and having a positive social impact. Has this worked? If we consider Gojek’s inclusion in this year’s CNBC Disruptor 50 list, companies that have the vision to change business and our daily lives, the answer is clearly yes.
But the story behind this company is both interesting and challenging in this pandemic era. Should you invest in Gojek stock now? After all, private investing has its pros and cons.
What is Gojek
Gojek began in 2010 as a call center for motorcycle ride-hailing in Indonesia, but over time it has become a multi-service platform offering services on demand and supporting digital payments. The headquarters are in Jakarta.
In 2015 the company launched its app with only three major services — GoRide, GoSend and GoMart. But as of today, it has more than 20 services. The applications have millions of users in the region of Southeast Asia and are a well-diversified business.
The founders of Gojek are Nadiem Makarim, Kevin Aluwi and Michaelangelo Moran. The company operated not only in Indonesia but also in Vietnam, Singapore, Thailand, and the Philippines. Some interesting facts for investors to note: the app boasts about 170 million users in SouthEast Asia, and the valuation of the company estimated to be near $10 billion.
Gojek is a large company — having between 5,000 and 10,000 employees according to Crunchbase — and it has raised a total of $4.8 billion in funding over 10 rounds. You should also know that Gojek stock has attracted big names and notable companies as investors. Some of the investors include Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Facebook (NASDAQ:FB), Paypal (NASDAQ:PYPL) and JD.com (NASDAQ:JD).
Having these companies invested in Gojek is a promising sign, but there is a serious problem now that should be considered: The Covid-19 outbreak.
The Pandemic Poses a Serious Threat for Gojek Stock
In Southeast Asia, millions could end up jobless because of the outbreak. The company decided to cut 9% of its staff and close down two of its services — GoFood festivals and GoLife — in the food and lifestyle divisions respectively. This could mean a major shift in Gojek’s business model in the future.
Some other bad news relates to the top-down approach in investing. Top-down analysis refers to broader investment analysis, starting from the economy of a country, then analyzing the business sectors and economic cycles to end with a selection of stocks in several companies.
Recently Fitch cut Indonesia’s GDP forecast, mentioning a deeper recession:
“Fitch Solutions has forecast Indonesia’s GDP to contract by 1.3 percent this year, compared with 2.8 percent economic growth in its previous projection, as the country is likely to see a slow recovery and remain under lockdown for a prolonged period.
“The national economy is heading into contraction as the country is still in the early stages of combating the COVID-19 pandemic while postponed infrastructure projects will severely weigh on investment growth, researchers at Fitch Solutions wrote. The global economy is expected to contract by 2.8 percent this year.”
The Organisation for Economic Co-operation and Development in a recent Indonesia Economic Snapshot mentioned “Following the outbreak of COVID-19, GDP is projected to contract in 2020, for the first time since the 1997 Asian crisis, by 2.8% or 3.9% depending on the scenario. The recovery will be subdued, with employment and income losses holding back private consumption, and by end-2021, GDP is projected to be 8% to 10% below its pre-crisis trend level depending on whether a second global wave of infections occurs later in 2020. The socio-economic consequences of the recession will be severe, notably for lower middle class groups, which are at great risk of falling back into poverty.”
No doubt, the coronavirus impact on Indonesia’s economy is severe.
The Business Model of Gokek
Gojek has a plethora of services. The main areas include:
- Transport and Logistics
- Daily needs
- News & Entertainment
Interestingly all services start with “go” — GoPay for payments, GoCar for transport, etc. The application is available on both Google Play and the App Store. It is important to focus on the three main pillars of Gojek, speed, innovation, and social impact. The contribution of the company in the economy of Indonesia is exceptionally large, estimated at $3 billion as of 2018.
Should You Invest in Gojek Stock?
The risks for the economy of Indonesia are severe and could take several years to get back to the pre-pandemic era. The fact is that Gojek is a key business presence in Southeast Asia, having already gained notable investors. While in the short-run the prospects do not seem very positive, interested investors can buy into Gojek stock on SharesPost and EquityZen , two alternative investment platforms.
As of this writing, Stavros Georgiadis did not hold a position in any of the securities.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks