Indonesian e-commerce giant Bukalapak went public on the Indonesia Stock Exchange (IDX) on 6 August 2021, just two weeks after Indian food-delivery company Zomato got listed on the National Stock Exchange of India (NSE). Both were still deeply unprofitable companies by the time they hit the public market. There are multiple similarities that can be drawn between the two companies. For one, they had their cards stacked against them pre-IPO. Bukalapak's core business, marketplace Bukalapak.com, had been falling behind in traction compared with rivals Tokopedia and Shopee. Zomato was heavily impacted by the pandemic—at one point, during the initial days of India’s lockdown, orders dropped by 70%. It had to lay off hundreds of employees. But despite it all, they came out as dark horses. Bukalapak broke the record with its US$1.5 billion IPO, the biggest in IDX’s history. Zomato’s IPO was oversubscribed by 38 times. Now that those milestones have been reached, the next phase is even more critical. Both companies need to prove to investors that they’re making headways to profitability, or else market sentiment will continue to push their share prices downward. (Both stocks are trading below their IPO prices.) About that next chapter, focused on Bukalapak - In an extraordinary general meeting of shareholders in December, the company decided to make a drastic move. It chose to reallocate a third of its IPO funds for new investments—money that was supposed to be working capital for its core business and existing subsidiaries. Since its IPO, Bukalapak has acquired an automated voice messaging platform and an upskilling company. It invested in a digital bank, an e-grocery platform, a fashion marketplace, and an established SME enabler startup. It’s diversifying more and more by the day. Zomato, too, has made investments worth around US$225 million in the past year. Last week, Bukalapak released its financial statements for the first quarter of 2022. It booked slightly over US$1 billion in net profit, after ending the last quarter of 2021 with over US$37 million in losses. Does that mean the diversification strategy is working? No...
