Grab stock has fallen significantly since it went public last December, when it was valued at $40 billion. Although the company’s market share in South-East Asia remains large, it is still facing challenges to grow its business. However, management has acknowledged these challenges and reiterated the need to focus on profitability and growth. With a low debt-to-equity ratio, Grab still has room to increase its capital to fund its growth strategy. Additionally, Grab’s growth potential is high; its stock can rise by 40-50% in the next few years.
Grab is a leading on-demand platform in South-East Asia. Its business spans across local commerce, financial services, and mobility. The company has three main verticals – delivery, payment processing, and finance. It started out in just one city in 2012, but today operates in 8 countries across South-East Asia. Its focus on expansion over profitability has paid off as it has increased its market share in several countries. However, Grab’s stock has underperformed in the macro-economic environment, so it is prudent to wait for a more positive trend.
Despite the challenging situation, the company reported a strong Q4 2018 performance. While gross merchandise volume (GMV) rose 32% year-on-year (yoy), monetization rates stayed almost flat. Mobile payment transactions were the company’s most profitable business, and revenue grew by 37% year-over-year.
The company has also made an announcement that it plans to add a new enterprise service to its platform. This move will allow Grab to tap a US$1 billion market opportunity. This new service will help the company expand into other industries, including grocery delivery. In addition to this, it will also focus on advertising. As a result, Grab stock price has soared since then.