When Grab Holdings Inc. went public in December, it lost $22 billion in value. On Thursday, its stock fell 37 percent after it reported bigger losses in the fourth quarter, which pushed the loss to $22 billion.
If you look at the Nasdaq Composite Index over the last few years, Southeast Asia’s ride-hailing and delivery company has lost 63% of its value. On Thursday, the Singapore-based company’s quarterly net loss almost doubled from last year, and its revenue dropped 44%. This was the biggest drop in its history. Comes as more than four times as many shares changed hands as they usually do in one month.
Grab, which is owned by SoftBank Group Corp. and Uber Technologies Inc., hasn’t been able to get back on its feet since it merged with Brad Gerstner’s Altimeter Growth Corp. late last year. The ride-hailing company has lost money since it was founded, and Thursday’s report showed that spending on growth is taking it even further away from making money, which is bad for the company.
When it came to its net loss, it came to $1.06 billion in the fourth quarter, which was more than the consensus figure of $645 million. There have been more and more losses for the company, which has made investors want to sell the stock along with other companies that haven’t made money. As the De-SPAC Index fell 5.4 percent on Thursday, Grab was the worst-performing company in the group of companies that used to be special-purpose acquisition companies. This was a record low for that group of companies.
In response to the pandemic, Grab has expanded its food delivery business to help users grow as a service. It’s expected that the online grocery market in Southeast Asia will almost triple to $11.9 billion in 2025 from $4.1 billion in 2020, Euromonitor International says.
But even though more people are spending money on Grab’s platform, it hasn’t yet led to profits. Last quarter, only $1 million was made from delivery, which isn’t very much for a business. As a result, if Grab spends a lot of money on incentives for drivers and customers, its quarterly revenue can be very different.
It spent more than twice as much on incentives in the last three months of the year. It spent $1.78 billion on incentives in 2021, up from $1.24 billion the year before, and that’s a lot more money.
A LightStream Research analyst said in a report on Smartkarma that “We didn’t think Grab would spend so much money on so many big incentives.” In this way, it looks like the company is having a hard time growing its business and making money.
A company called Grab, which was started by Anthony Tan and Hooi Ling Tan, has long been thought to be one of the best businesses for growth in Southeast Asia. As a ride-hailing and delivery service pioneer in the United States, Uber was one of the first companies to do this. It sold its Southeast Asia operations to Grab in 2018.
One of Grab’s problems is that there is more competition, especially from Sea Ltd., Southeast Asia’s biggest internet company. Indonesian ride-hailing service Gojek merged with an online shopping service called PT Tokopedia to become GoTo, which is better known as GoTo. This year, the combined company is planning to go public both at home and in the United States.