By Bernadette Toh and Olivia Poh GoTo Group shares tumbled after Indonesia’s stock exchange eliminated its 50-rupiah price floor, unleashing pent-up selling pressure from investors who had been unable to exit at the mandated minimum price.

The ride-hailing and food-delivery platform’s stock fell 14% to 43 rupiah in early Jakarta trading, pushing its market capitalization below $3 billion. The share price had been stuck at 50 rupiah — or less than one US cent — for about four months.

The price floor, put into effect more than a decade ago to protect investors from sharp price declines, is uncommon among major markets, which typically rely on trading halts or circuit breakers to curb volatility. Investors have complained that stocks that fall to the minimum price floor can become effectively untradable.

“The next few months will be a test of whether the current selloff is purely technical or also reflects questions around its fundamentals and valuation,” said Wilbert Arifin, an analyst at Mirae Asset Sekuritas Indonesia. “For the only meaningful tech proxy in Indonesia, it sure is painful.” The removal of the price floor dovetails with broader regulatory efforts to improve liquidity in Indonesia’s stock market, after MSCI Inc. warned in January of a possible downgrade to frontier status due to investability concerns. Currently, more than a hundred stocks in the 900-something member Jakarta Composite Index are trading at or below the 50-rupiah level, according to exchange data. Some shares can trade below the threshold if they’re part of the full call auction — a mechanism that matches buy and sell orders at scheduled times instead of continuously.

“The next few months will be a test of whether the current selloff is purely technical or also reflects questions around its fundamentals and valuation,” said Wilbert Arifin, an analyst at Mirae Asset Sekuritas Indonesia. “For the only meaningful tech proxy in Indonesia, it sure is painful.” The removal of the price floor dovetails with broader regulatory efforts to improve liquidity in Indonesia’s stock market, after MSCI Inc. warned in January of a possible downgrade to frontier status due to investability concerns. Currently, more than a hundred stocks in the 900-something member Jakarta Composite Index are trading at or below the 50-rupiah level, according to exchange data. Some shares can trade below the threshold if they’re part of the full call auction — a mechanism that matches buy and sell orders at scheduled times instead of continuously.

GoTo, backed by Alibaba Group Holding Ltd., was once one of Indonesia’s most valuable companies, with its market capitalization topping $32 billion shortly after its Indonesian listing in April 2022. But years of heavy losses due to steep competition against deep-pocketed rivals such as Grab Holdings Ltd. have affected investor sentiment. While a series of restructurings and leadership changes helped GoTo post its second straight quarterly profit in July, those efforts have largely failed to stoke enthusiasm.

GoTo, backed by Alibaba Group Holding Ltd., was once one of Indonesia’s most valuable companies, with its market capitalization topping $32 billion shortly after its Indonesian listing in April 2022. But years of heavy losses due to steep competition against deep-pocketed rivals such as Grab Holdings Ltd. have affected investor sentiment. While a series of restructurings and leadership changes helped GoTo post its second straight quarterly profit in July, those efforts have largely failed to stoke enthusiasm.

“There is a disconnect between GoTo’s current share price and the strength of the underlying business,” the company said in an emailed response to a request for comment. “We remain focused on strengthening business performance, which we believe will deliver value for shareholders over the long term.” MSCI removed GoTo from its stock indexes in its quarterly review last month after it failed to meet relevant liquidity requirements.

“There is a disconnect between GoTo’s current share price and the strength of the underlying business,” the company said in an emailed response to a request for comment. “We remain focused on strengthening business performance, which we believe will deliver value for shareholders over the long term.” MSCI removed GoTo from its stock indexes in its quarterly review last month after it failed to meet relevant liquidity requirements.