Ray Dalio’s Bridgewater added new stake in Grab, but should you grab too?
The hedge fund giant founded by Ray Dalio, Bridgewater Associates in its latest 13F filling for the first quarter of 2023 added 1.36M shares of Grab.
Grab is a major ride-hailing and food delivery player in South East Asia, which benefited from the high mobile internet penetration in the region. The Covid19 pandemic helped to boost its delivery platform as lockdowns meant that restaurants were not open to diners, instead relying on deliveries to generate income. Grab current has around 71% market share in ride hailing, and 54% in food delivery.
Mobility Is their only profitable segment
In its last financial results reporting, its segment adjusted EBITDA revealed that its mobility segment grew 43.1% Y/Y, while its delivery segment managed to reduce its EBITDA margin loss. Full year 2022 revenue for delivery was $663 million, while mobility full year 2022 revenue was $639 million, and financial services full year 2022 revenue was only 71 million, around less than 5% of its total full year revenue.
Grab will report its first quarter 2023 earnings today May 18 before the bell, and analysts expect $505 million in revenue and -$0.07 in EPS.
Delivery slowdown trend expected
Food delivery growth in South East Asia got a boost in 2020, growing by 183%. However, it is expected to slowdown as locksdowns have mostly been lifted and diners are returning back to restaurants and eating out. As food delivery is something that consumers pay extra in exchange for convenience, in mega cities like Singapore, Bangkok, Manila, and Jakarta, there is a huge potential for food delivery in the long run. However as consumers start to cut back on such convenience spending due to a potential slowdown or recession, in the short term this will likely impact the food delivery market. Also, Grab's ride hailing and food delivery operates in South East Asia, where incomes are lower compared to its competitors like Uber and Door Dash which operates in the US and more developed markets with higher income streams, it remains highly challenging to maintain growth in South East Asia.
Expect management to prove to shareholders that it has what it takes to trim operating expenses in the next few years as it prepares to turn profitable.
Should you buy Grab when whales like Bridgewater bought it too? Share your opinion in the comments.
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I'm hopping on the Grab train too! Mobile internet penetration + market domination = investment gold
Ray Dalio is a well-respected investor and his decision to add a new stake in Grab is certainly noteworthy.
Grab is killing it in South East Asia with its ride-hailing and food delivery dominance
Ray Dalio's Bridgewater Associates knows what's up! Adding 1.36M shares of Grab? Smart move
Grab's delivery platform thrived Genius