Grab shares tumble after outlook miss amid tough competition, slowing Asia market

SINGAPORE - Grab Holdings’ shares tumbled after it predicted full-year revenue that trailed estimates, suggesting caution around a South-east Asian ride-hailing and food delivery market where Gojek parent GoTo Group remains a formidable rival.

The Singapore-based company expects a 19 per cent to 22 per cent rise in revenue to US$3.33 billion (S$4.46 billion) to US$3.4 billion in 2025, just shy of the US$3.5 billion average of analysts’ projections polled by Bloomberg.

The company logged a smaller than expected 23 per cent decline in quarterly net income.

But Grab also spent almost 30 per cent more on incentives to boost usage of rides, meal delivery and financial services during the period, reflecting growing competition on multiple fronts.

Its New York-listed shares fell around 11 per cent during US post-market trading. 

“We always take a more of a conservative view when we give guidance at the beginning of the year,” Grab’s chief financial officer Peter Oey said in an interview, adding that the company’s outlook has often improved as the year progresses. “We should be positive net income in 2025,” he said.

Regarding the surge in incentives in the quarter just ended, Mr Oey later said on an earnings call that such costs move up and down and that the fluctuation is intentional.

Bloomberg Intelligence analyst Nathan Naidu said: “Grab’s 2025 guidance suggests revenue will grow at about 2024’s reported 19 per cent rate, while adjusted Ebitda (earnings before interest, taxes, depreciation and amortisation) margin could widen further despite intensified competition in its bread-and-butter businesses.

“Its well-established user and rider ecosystems are a strong defence that it will need to stand against rivals including Sea’s ShopeeFood, which overtook Gojek to become the No. 3 food-delivery app in South-east Asia, according to Momentum Works.”

Grab also faces competition from foodpanda and GoTo. That only exacerbates worries at a time when consumer sentiment remains weak.

Growth has cooled dramatically from triple-digit rates in years past as customers in the region curb spending to cope with elevated inflation and interest rates.

In a move that would upend the regional market, Grab is reportedly weighing a takeover of GoTo at a valuation of more than US$7 billion.

While the regulatory hurdles are considerable, both companies have accelerated talks for a combination to end years of losses, media reports have said.

For the fourth quarter of 2024, Grab reported a 17 per cent rise in revenue to US$764 million, beating analysts’ estimates of US$757.6 million. 

Its fourth-quarter net profit of US$27 million was down from US$35 million in the year-ago period but topped estimates of US$10.3 million.

For full-year 2024, Grab made a loss of US$105 million, narrowing from US$434 million in 2023. Revenue rose 18.6 per cent to US$2.8 billion.

Grab co-founder and group chief executive Anthony Tan said: “Fourth quarter was our strongest quarter ever. We finished 2024 with on-demand GMV (gross merchandise value) growth accelerating to 20 per cent year on year, and as we continue to generate profitability at scale.

“We have more users on our platform than ever, and our unique platform advantages place us in a strong position to continue this growth momentum into 2025, and to deepen user engagement across our ecosystem.”

After years of spending to gain market share and fend off competition, Grab is taking steps to become a more financially mature company.

Like its backer, Uber Technologies, it has slashed jobs and reined in spending to pivot towards profitability. The region’s largest ride-hailing and food delivery player has also pushed into new areas through acquisitions.

Grab is also betting on new initiatives in areas from digital finance to its core delivery services, saying in 2024 that such efforts should help its revenue accelerate from 2025. BLOOMBERG, REUTERS