PYPL - Grab: A Sleeping Giant
2024-03-19 16:33:23 ET
Summary
- Grab Holdings Limited is the baddest superapp in Southeast Asia, with seemingly impenetrable moats.
- The growth of the digital economy in Southeast Asia should be a massive tailwind for Grab.
- Profitability is improving, with margins expanding across all segments.
- Yet, the stock is still down 80% from its all-time highs.
- I believe there's a huge disconnect between Grab Holdings fundamentals and valuation.
Introduction
Over two years ago, when I heard about Grab Holdings Limited ( GRAB ) going public at a $40B valuation, my initial reaction was that the company was probably overpriced.
Looking back, I was right about this.
Without even doing any research, I also made the uneducated conclusion that the on-demand business model in Southeast Asia might just be unsustainable and would remain unprofitable for all eternity.
As it turns out, I was dead wrong about this — in Q4 , the company turned GAAP profitable for the first time ever.
So after a flip to GAAP Net Income positivity and after an 80% decline in the stock price, I figured there might be some value in the stock — so I looked into it.
After doing some research, I realized that Grab is a tech giant in hibernation.
With that being said, grab (pun intended) a cup of coffee and get cozy, because this is a deep dive into Southeast Asia's superapp. Enjoy!
Company
A little over a decade ago, two Malaysian-born Harvard Business School students — Anthony Tan and Tan Hooi Ling — teamed up to pitch a business idea for the HBS New Venture Competition in July 2011....
Grab: A Sleeping Giant