GoTo, the Singaporean ride-hailing and food delivery giant, has been facing intense pressure from investors to turn a profit after reporting massive losses over the past few years. In response, the company has announced a series of cost-cutting measures aimed at reducing expenses and boosting profitability. However, the question remains: will these measures be enough to reinvigorate GoTo’s stock prices?

Background on GoTo’s financial situation

GoTo, formerly known as Grab, has grown rapidly since its launch in 2012. The company now operates in over 400 cities across eight countries in Southeast Asia, offering a wide range of services including ride-hailing, food delivery, and digital payments. However, despite its rapid growth and dominance in the region, GoTo has yet to turn a profit.

In fact, the company reported a net loss of $2.7 billion in 2020, up from $1.3 billion in 2019. This loss was primarily due to heavy investments in new services, aggressive expansion into new markets, and intense competition with other ride-hailing and food delivery companies.

GoTo’s loss-cutting measures

To address its financial challenges, GoTo has announced a series of measures aimed at reducing costs and boosting profitability. These measures include:

1. Job cuts: In January 2022, GoTo announced that it would lay off 5% of its workforce, or around 360 employees, across several departments including engineering, sales, and marketing. The company also announced plans to merge its ride-hailing and food delivery teams, resulting in the consolidation of some roles.
2. Focus on core businesses: GoTo has stated that it will focus on its core businesses of ride-hailing and food delivery, and will divest from non-core businesses such as financial services and travel. The company has already sold its Indonesian e-commerce business, Kudo, and is reportedly in talks to sell its car rental business, rental car.
3. Reduction in subsidies: GoTo has also announced plans to reduce subsidies for its ride-hailing and food delivery services, which have been a major driver of customer acquisition but also a significant expense for the company. The reduction in subsidies could lead to higher prices for customers, which could impact demand for GoTo’s services.

Impact on GoTo’s stock prices

The announcement of these loss-cutting measures has been met with a mixed response from investors. On one hand, some analysts believe that the measures are necessary for GoTo to become profitable and sustain its growth over the long term. On the other hand, others are concerned that the reduction in subsidies and potential price increases could lead to a decline in customer demand and revenue.

Since the announcement of the measures, GoTo’s stock prices have fluctuated. In the short term, the stock prices have been volatile, with investors reacting to each piece of news related to the company’s financial performance and prospects. However, it remains to be seen whether the loss-cutting measures will have a significant impact on GoTo’s stock prices over the long term.

The future of GoTo

GoTo is facing intense competition from other ride-hailing and food delivery companies in Southeast Asia, including Uber, Gojek, and Deliveroo. The company’s success will depend on its ability to continue innovating, expanding into new markets, and offering competitive pricing and services.

The loss-cutting measures announced by GoTo are a step in the right direction, but it remains to be seen whether they will be enough to turn the company’s.