Tight Indonesian Regulation Will Constrain Fintech Yet Yield Modest Resilience

AN
AnalystLowTarget
AnalystLowTarget
Not Invested
Consensus Narrative from 25 Analysts
Published
28 Jun 25
Updated
16 Jul 25
AnalystLowTarget's Fair Value
Rp73.00
20.5% undervalued intrinsic discount
16 Jul
Rp58.00
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1Y
5.5%
7D
-1.7%

Author's Valuation

Rp73.0

20.5% undervalued intrinsic discount

AnalystLowTarget Fair Value

Key Takeaways

  • Regulatory pressures, competition, and evolving compliance demands may limit GoTo's ability to fully capitalize on Indonesia's digital growth and sustain profit improvements.
  • Reliance on incentives, challenges in retaining merchants and drivers, and rising logistics costs threaten both profitability and customer loyalty amid increased market rivalry.
  • Lingering macroeconomic uncertainty, competitive pressures, and currency volatility threaten both revenue growth and profitability across GoTo's Fintech, On-Demand, and E-commerce segments.

Catalysts

About GoTo Gojek Tokopedia
    Provides and operates on-demand services in Indonesia and internationally.
What are the underlying business or industry changes driving this perspective?
  • While strong smartphone penetration and increasing digital adoption in Indonesia are expanding GoTo's addressable market, intensifying regulatory scrutiny and evolving compliance demands may limit its ability to fully capitalize on this growth, potentially eroding future revenue upside.
  • Although the expanding middle class and preference for digital financial services support greater user engagement with GoTo's payments and lending products, the global push for domestic fintech champions and payment rail independence could curtail the uptake of its financial ecosystem over the long term, dampening growth in net margins.
  • Despite demonstrated operational efficiencies through technology investments-including improvements in logistics and targeted incentive spending-continued heavy reliance on customer incentives and competition from both local and global rivals may constrain the sustainability of adjusted EBITDA improvements.
  • While broad ecosystem integration and premium product innovation have driven wallet share and customer retention gains, persistent challenges in merchant and driver retention due to third-party dependence could restrict transaction frequency and reduce earnings growth if platform loyalty weakens.
  • Even as e-commerce penetration continues to rise and supports robust GMV growth, escalating logistics costs and the threat of global e-commerce giants entering the Indonesian market could pressure GoTo's profitability, putting both future revenue and earnings at risk.

GoTo Gojek Tokopedia Earnings and Revenue Growth

GoTo Gojek Tokopedia Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • This narrative explores a more pessimistic perspective on GoTo Gojek Tokopedia compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
  • The bearish analysts are assuming GoTo Gojek Tokopedia's revenue will grow by 12.0% annually over the next 3 years.
  • The bearish analysts assume that profit margins will increase from -28.5% today to 2.6% in 3 years time.
  • The bearish analysts expect earnings to reach IDR 580.3 billion (and earnings per share of IDR 0.54) by about July 2028, up from IDR -4576.3 billion today. The analysts are largely in agreement about this estimate.
  • In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 188.7x on those 2028 earnings, up from -13.6x today. This future PE is greater than the current PE for the ID Multiline Retail industry at 11.2x.
  • Analysts expect the number of shares outstanding to decline by 2.09% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 14.83%, as per the Simply Wall St company report.

GoTo Gojek Tokopedia Future Earnings Per Share Growth

GoTo Gojek Tokopedia Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Management repeatedly highlighted the uncertainty of the macroeconomic environment, with global financial market volatility and localized demand pressures potentially limiting consumer spending and slowing revenue growth across Fintech and On-Demand Services in the coming quarters.
  • The deceleration in loan book growth within Fintech, combined with cautious and conservative underwriting in anticipation of possible asset quality deterioration, could constrain future lending revenue and undermine net income if credit losses rise.
  • GoTo's profitability is increasingly reliant on premium service uptake and effective incentive spending, but if mass market customer growth slows or consumer down-trading emerges, overall transaction volume and gross merchandise value will be pressured, negatively impacting total revenue and margins.
  • Intense competition in Indonesia's On-Demand and E-commerce sectors, as well as ongoing rumors of key competitor mergers, may trigger price wars or increased incentive spending, compressing operating margins and delaying consistent earnings growth.
  • Significant exposure to currency volatility and ongoing adjustments to foreign exchange gains and losses in reporting highlight risks tied to exchange rate fluctuations, which could unpredictably impact consolidated earnings and financial results under long-term rupiah depreciation scenarios.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The assumed bearish price target for GoTo Gojek Tokopedia is IDR73.0, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of GoTo Gojek Tokopedia's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  • However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of IDR140.0, and the most bearish reporting a price target of just IDR73.0.
  • In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be IDR22527.1 billion, earnings will come to IDR580.3 billion, and it would be trading on a PE ratio of 188.7x, assuming you use a discount rate of 14.8%.
  • Given the current share price of IDR59.0, the bearish analyst price target of IDR73.0 is 19.2% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystLowTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystLowTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystLowTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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