does the app make a profit?
In 2012, an app called MyTeksi was launched in Malaysia. Within a year, it had become Grab Taxi. The company moved to Singapore in 2014 and became known as Grab (GRAB).
Considered the largest tech start-up in Southeast Asia, the company believes in creating economic empowerment for everyone in the region. It has offices in eight South Asian countries, including Cambodia and Thailand.
Grab was Southeast Asia’s very first decacorn company (a private company with a valuation of $10 billion or more). It offers a wide portfolio of services, ranging from deliveries and mobility to financial services.
In its December 1, 2021 press release, the company announced its Nasdaq debut through Altimeter, a Special Purpose Acquisition Company (SPAC). Anthony Tan, co-founder and CEO of Grab, said:
“We are convinced that now is the time for Southeast Asia to shine, and we hope that our entry into the global public market will help bring more attention to the tremendous opportunity here in the region.
The stock debuted at $13.06 and rebounded 1.76% to hit an intraday high of $13.29. However, it closed its first day of trading at $8.75, down 33%. Join us as we find out what lies ahead for this awesome app company, undertake a Grab stock price prediction, and get insights from analysts on the expected Grab stock price.
Enter fundamental analysis
On November 11, 2021, the company released its third quarter 2021 financial results for the three months ended September 2021. Grab’s business went down.
The $157 million in reported revenue for the third quarter of 2021 represents a decline of nearly 9% year-over-year (YoY) from the third quarter of 2020 revenue of $172 million. Of its four reportable market segments – deliveries, financial services, mobility and enterprise – revenue growth was only seen in two: deliveries and financial services.
Deliveries revenue increased 58% from Q3 2020, reaching $49 million for Q3 2021. Similarly, Financial Services revenue reached $14 million, an increase of 11% year-on-year.
On the other hand, the mobility business fell 26% to $88 million from the third quarter of 2020. In the enterprise segment, the year-over-year revenue loss was 37%, reaching $7 million. dollars for the third quarter of 2021.
Net losses for Q3 2021 were $988 million, up 59% from Q3 2020 losses of $621 million. A major contributor was the company’s non-cash expenses, which included changes in the fair value of investments and accrued interest on Grab’s redeemable convertible preferred stock. Much of this non-cash spending is expected to be eliminated with the completion of the Grab and SPAC Altimeter business combination.
However, in positive news from Grab shares, its gross merchandise value (GMV) reached a quarterly high of $4 billion in the third quarter of 2021. was recorded. Additionally, the GMV of shipments increased by 63% since the third quarter of 2020 and reached $2.3 billion.
Despite lower overall revenue and higher losses in Q3 2021, Grab’s co-founder and CEO remained optimistic about the brand’s future, saying:
“Despite severe lockdowns in Vietnam and increased restrictions in the region in the third quarter due to Covid-19, we executed our superapp strategy well and delivered strong growth. With the recovery in sight and the gradual reopening of economies that bring tailwinds to our business, we are doubling down on investments that will help us capture a greater share of the opportunities available to us and open up new addressable markets for Grab, such as groceries.”
Capture stock price movements
Grab announced its decision to go public through a shell company, Altimeter Growth, for $39.6 billion in April 2021. At the time, it was the largest offering ever. American shares ever achieved by a Southeast Asian company.
However, on its first day of trading on Nasdaq, the Grab stock price chart reported a 33% drop from $13.06 to $8.75. In the first week, the stock was down 7.65%, closing at $8.08 on December 9, 2021, down from its December 2, 2021 closing price of $8.75.
According to S&P, the near-term outlook for the Grab stock market looks bleak – the company may not start generating positive operating cash flow until 2023. In its December research rating, S&P gave the company a rating of B-, noting:
“We continue to expect Grab’s credit profile to be limited by a lack of track record of generating positive free cash flow and maintaining profitable operations. This is because the business continues to be in deficit.
At the time of writing (January 18, 2022), the stock last closed at $6.04. From its opening price of $13.06 when the NAsdaq debuted on December 2, 2021, the stock has fallen 53.75%.
Enter stock price forecasts
At least four Wall Street analyst forecasts, as compiled by TipRanks, suggest a consensus 12-month price target at $11.25. The stock projection ranged from a low of $10 to a high of $12.50. The average price target represents an upside change of 86.26% from the last trade price of $6.04.
However, according to Wallet Investor’s algorithmic forecast, as of January 18, 2022, Grab’s stock price target could potentially drop to $0.0535 by April 2022. Wallet Investor is bearish on the stock’s value grab. It does not offer its market value beyond August 2023, suggesting a closing price of $0.000001. This limits our scope to provide the Grab stock price prediction for 2025-2030.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst at Gemstone Equity Research & Advisory Services, shared technical analysis for Grab, saying:
“The stock has a relatively less technical price history. It has seen a consistent and strong decline from 5:15 p.m., the lower high it formed after the 6:11 p.m. high. Although the stock is oversold, it is little likely there is anything structural except some technical bounces This stock is best avoided as there are no triggers at this time that would/warrant re-entry at current levels .
On December 6, 2021, JPMorgan initiated its hedge on Grab stock as “overweight” and set a price target of $12.50. Citigroup also has a “buy” rating on the stock, with a price target of $12 as of December 15, 2021. As of December 30, 2021, Jefferies has set a price target of $10.50 and recommended a “ purchase”.
When researching Grab stock price predictions, it is important to keep in mind that analysts’ price predictions and targets may be wrong. Each analyst’s Stock Grab analysis is based on conducting fundamental and technical studies of the stock’s performance. Past performance is not indicative of future results.
According to data compiled by Tip Ranks, based on four Wall Street analysts, all gave the stock a “buy” recommendation. Since listing on Nasdaq on December 2, 2021, the stock has fallen more than 50%, as of January 18.
Note that analysts’ predictions are often wrong. Forecasts should not replace your own research. Always do your own due diligence before investing. And never invest or trade money you can’t afford to lose.
Read more: NASDAQ 100 forecast for 2022: Will the market correction start to bite?
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