To The Moon

$Grab Holdings(GRAB)$ plunged nearly 40% in a single day, the biggest drop since IPO.How much the market hates losses?

This earnings season can be said to be a nightmare for growth stocks. As long as the earnings report misses expectations, or the loss is enlarged, or there is no clear profit guide, then it will drop 20% at least.

What's even more frightening is that, like Grab, it fell by nearly 40% in a day. This oversold didn't even have any decent counter-pumping before the close.

Just one thing, the downtrend is likely to continue for a long time without any clear signal reversal...

We cleared Grab's financial report, and there are two main mine points:

1) Due to Grab's large expenditure on driver incentives, Q4GMV increased by 26% year-on-year to 4.5 billion US dollars, but its revenue decreased by 44% year-on-year to 122 million US dollars;

2) The net loss nearly doubled, with a single-quarter loss of $1.1 billion, significantly higher than the average analyst forecast of $645 million.

We know that Grab is a super APP in Southeast Asia, covering many businesses such as Mobility, Delivery and payment. At present, Grab is at a very awkward time node, and multi-line operations make Grab lose sight of one thing and the other.

First of all, the Mobility, which accounts for more than 80% of the total revenue, is struggling to recover. As we know, Grab started with Mobility. As all localities have not been completely unsealed, the travel demand is still slowly recovering. Q4GMV has decreased by 14% compared with the same period in 2021, while the revenue has decreased by 37%, indicating that the company has increased incentives for drivers, which is a necessary measure to ensure the steady recovery of travel business and leading market share.

As a result, Grab's Mobility market share reached 71% in the fourth quarter, nearly four times that of the second. However, there is not much room for adjustment in the 23% commission rate, and Grab may face the choice between guaranteeing market share or income (commission) in the future.

Second, Delivery revenue dropped by 98% to $1 million, which is almost all the income used for incentives. At present, the market share of Delivery exceeds 50%, followed by about 21%. With greater deregulation in various places, the pressure on Delivery business will only increase. The management expects that by the first half of next year, the adjusted EBITDA of the food delivery department will break even, which is actually not small.

Southeast Asia used to be a Blue Ocean, but now it is more like the Red Ocean. The leading enterprises in various fields have basically got money when the stock price is at a high level, and the book cash is abundant. As a result, the competition will only become more intense.

The current valuation is also very unfavorable to Grab. The company expects GMV growth from the second quarter to the fourth quarter of 2022 to increase by 30% to 35% year-on-year. Under this growth rate, even if the revenue can double in 2022, the market value of Grab is only 6-8 billion US dollars, and there is still 40% room to decline.