SINGAPORE, 29 August – Grab Holdings Ltd. shares tumbled after it reported a wider loss than analysts had estimated, a sign of the challenges in turning its ride-hailing and delivery businesses profitable.
The Singapore-based company said its net loss for the second quarter was about $547 million, contracting almost 30% from a year earlier. Still, that was more than the $335 million loss analysts had projected, according to data compiled by Bloomberg.
Grab shares tumbled 12% in US trading and are now down more than 55% this year.
Grab, which had been one of Southeast Asia’s hottest startups and is led by Anthony Tan, has struggled since it went public via a merger with a US blank-check company last year. Its shares have dropped since then as losses piled up during pandemic-era lockdowns and money-losing companies have fallen out of favor with investors.
To combat the downturn in ride-hailing, Grab had pivoted to expand into groceries and made a significant investment.
But the company said yesterday it decided to shut its dark-store operations in Singapore, Vietnam and the Philippines to cut costs and streamline its deliveries operations, retreating from the earlier strategy.
Now Tan must navigate through an era of rising inflation that could dampen demand just as Grab is trying to emerge from Covid challenges.
The company has faced increasing competition from GoTo Group and Sea Ltd.Grab said its gross merchandise value will expand 21% to 25% this year, compared with 30% to 35% it had projected previously.Grab anticipates some softening of the food delivery demand, said Chief Executive Officer Tan in a conference call on Thursday.
“That’s why we lowered our GMV estimates,” he said.The company reported $2.5 billion in GMV for its delivery arm, which was once touted as a key growth area.
That fell short of its own projections of up to $2.65 billion for the quarter as consumers ordered less takeout and groceries online after pandemic-era restrictions receded.
While the company’s overall second quarter results were “solid,” deliveries GMV came in below expectations and total net loss was wider than Citigroup’s estimate, analyst Alicia Yap said in a report. — Bloomberg