Shares of Grab Holdings Ltd. declined after the Southeast Asian ride-hailing and food delivery company reported slowing spending by customers grappling with a higher rate of inflation and rising interest rates.
While the Singapore-based company reported a narrower quarterly loss, it said its gross merchandise value grew just 3% in the three months through March to US$4.96 billion ($6.69 billion). That’s down from 24% for the full-year 2022 and missed the US$5.22 billion analysts estimated. The stock declined as much as 11%, the most since September, in New York trading Thursday.
The company’s user growth also slowed as competition in Southeast Asia’s ride-hailing and delivery markets intensified, with the contenders luring customers with promotions and lower prices. Grab also has been slower to reduce expenses than regional competitors — as Singapore’s Sea Ltd. and Indonesia’s GoTo Group eliminated thousands of jobs last year, Grab refrained from mass layoffs.
After years of losses, Grab has predicted a breakeven on an adjusted basis in the last quarter of this year. But on a net income basis, it is far from profitability. In the first quarter, its net loss narrowed to US$244 million from US$423 million a year earlier.
Like its peers, Grab is trying to convince investors of its longer-term earnings prospects even as slower economic growth, rising costs and stiff competition weigh on margins in Southeast Asian markets where consumers have limited spending power. Sea on Tuesday reported earnings that missed estimates while net losses at Indonesia’s GoTo Group exceeded US$250 million.
Grab’s adjusted losses before interest, taxes, depreciation and amortization in the first quarter narrowed to US$66 million. That compares with the US$118 million loss analysts estimated. On that basis, the annual loss is set to be as small as US$195 million, compared with US$275 million forecast previously, Grab said. Quarterly revenue more than doubled and topped estimates.
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Revenue from Grab’s deliveries segment tripled to US$275 million. Sales at its mobility arm rose 72% to US$194 million, while revenue from its financial services unit more than tripled to US$38 million.
What Bloomberg Intelligence Says:“An intensified focus on profitability means Grab’s GMV growth could be half the 41% yearly pace in 2018-21. Yet mobility’s recovery and deliveries’ rising profitability should fuel strong revenue growth.”-Nathan Naidu, analyst
