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Grab Shares Crash As Revenue Plunges On Promotions, Driver Incentives

Shares in Grab tumbled 37 per cent yesterday after Southeast Asia’s no. 1 ride-hailing and food delivery firm posted a US$1.1 billion quarterly loss and a worse-than-expected drop in revenue, hit by promotional offers and higher driver incentives.

Singapore-based Grab Holdings Ltd has poured money into incentives to attract drivers as ride-share demand recovers from pandemic lows, and also offered aggressive food-delivery promotions as people began to dine out more with the easing of Covid-19 restrictions.

But the incentives ate into sales in the fourth quarter ended Dec. 31 – the first it has reported as a public company -which slumped 44 per cent to US$122 million.

“We plan to be judicious and disciplined in allocating capital, as we double down on the long-term growth opportunities of our on-demand, advertising and financial services businesses,” Chief Financial Officer Peter Oey said in a statement.

Grab is fighting to retain its market-leader position in the face of stiffer competition from GoTo, a company formed by the merger between ride hailing app Gojek and e-commerce firm Tokopedia, as well as Southeast Asian tech firm Sea Ltd.

Shares of Grab skidded to their lowest ever yesterday at US$3.09, wiping off more than US$7 billion from its market value.

Since going public in December after a US$40 billion merger with a blank check firm, Grab’s stock has shed nearly three-quarters of its value.

Still, the incentives managed to boost gross merchandise volume (GMV), a measure of transaction volumes, which rose 26 per cent.

Grab said it expects GMV growth between the second and fourth quarters of 2022 to jump 30 per cent to 35 per cent year-on-year, and predicted it would break even on an adjusted EBITDA basis in its food delivery unit by the first half of next year.

“We believe the 30 per cent sell-off in share price is unwarranted,” Citigroup analysts said in a note, adding that broad market weakness amid geopolitical instability might have prompted some investors to cut losses.

Revenue from Grab’s mobility unit, which accounted for 86 per cent of overall sales, declined 27 per cent in the quarter. Revenue from its food delivery services unit plunged 98 per cent. — REUTERS

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