NEW YORK: Grab Holdings Ltd, Southeast Asia's biggest ride-hailing and food delivery firm, on Thursday (Feb 23) forecast upbeat 2023 revenue and pulled forward its profitability timeline, betting on strong demand for its services and as cost cuts pay off.
Shares of the company, however, fell about 9% on fears of a slower recovery as Grab projected a return to pre-Covid-19 pandemic levels in its rideshare business only by the end of the year.
Demand for delivery services has slowed since the height of the pandemic, but with offices reopening more people are booking rides through Grab, a household name in eight Southeast Asian countries.
Evercore ISI analyst Mark Mahaney said Grab’s forecast implies a “meaningful deceleration” from the 20% growth in gross merchandise value in the last couple of years to single-digit growth in 2023.
“While we do not see this as a sign of weakening fundamentals ... this will be the metric to keep a close eye on.”
Grab forecast 2023 revenue between US$2.2 billion and US$2.3 billion (RM9.75 billion and RM10.19 billion), compared with an estimate of US$1.97 billion, according to Refinitiv data.
CEO Anthony Tan assured investors that economies reopening, tourism recovering and expansion into more cities would help its rideshare business. “There is growing consumption in the (Southeast Asia) region, a population that craves on-demand digital services.”
Grab, which has spent heavily on incentives and promotions to gain traction among customers, is scaling back on those expenses and taking other measures to cut costs.
That has helped it bring forward its forecast for break-even on an adjusted core earnings basis to fourth quarter this year from the second half of 2024.
For 2023, Grab forecast loss before interest, taxes, depreciation, and amortisation between US$275 million and US$325 million, smaller than its 2022 loss of US$793 million.
“It’s solid overall, but losing money is a problem .... this is not the market environment for businesses losing money,” said Thomas Hayes, chairman at Great Hill Capital in New York. – Reuters