To The Moon

$Grab Holdings(GRAB)$The media and sell-side analysts painted a good picture on Grab’s 2Q22 result. But I remained sceptical about Grab’s future as its market becomes more challenging and competitive, with no sign of near-term profitability. With a net cash of only S2.6bil, I wonder how many quarters can Grab sustain its cash burn before raising new equity and dilute shareholders.

EBITDA loss widen; Loss reduced primarily due to elimination of the non-cash interest expense from converted preference shares

Adjusted EBITDA loss widens 9% to -233mil, even as revenue grew by 79%. Similar to Sea Ltd, I feel a lot of the GMV and revenue growth are still fuelled by incentives. At the same time, HQ costs have remained elevated – 2Q22 HQ costs of $214m.This EBITDA loss will only widen more next year in my opinion, even as Grab management claims to focus on profitability.

GMV growth slowed down.

Grab’s guidance for 3Q22 GMV for deliveries is relatively flat qoq, while slight sequential growth for mobility GMV. If HQ costs remain elevated, they are likely to weigh on Grab’s profitability as GMV growth is slowing down and financial services is a few years from profitability.

Main Indonesia market dominated by Go-To

Ever since the merger of Tokopedia and Gojek, GoTo has dominated Indonesia market, which is a key market for Grab. It will be a difficult period for Grab to gain market share and focus on profitability with a big competitor around.

I feel $Uber(UBER)$ is a much better choice than Grab at current valuation, as Uber has proven its track record of its economics of scale in the developed markets. Uber is likely emerging out of the J-curve as the flywheel effects take off its multi-year growth. Currently, Grab is still at early stage of development with no signs of slower cash bleeding.

@TigerStars@Daily_Discussion@CaptainTiger