Grab Sees Decline in Rider Spending, Stock Tumbles

Key Takeaways

• Grab Holdings posted lower-than-expected revenue and gave a soft full-year outlook as riders spent less on its service.
• The Asian ride-hailing firm reported the average amount of spending per user declined 6% from 2023.
• Both revenue and adjusted EBITDA guidance came up short of analysts’ forecasts.

Shares of Grab Holdings (GRAB) tumbled in intraday trading Thursday as the Asian ride-hailing firm missed revenue estimates and gave soft guidance as rider spending declined.

The Singapore-based company reported second-quarter revenue rose 17% year-over-year to $664 million, $16 million below the average estimate of analysts surveyed by Visible Alpha. The loss per share of $0.01 was in line with forecasts.

While on-demand users increased 19% to 36.7 million, the average amount of spending per user dipped 6% to $121, below estimates. Deliveries revenue climbed 11% to $356 million, Mobility revenue was up 19% to $247 million, and Financial Services revenue soared 54% to $60 million.

Full-Year Revenue, Adjusted EBITDA Guidance Below Estimates

The company sees full-year revenue in the range of $2.70 billion to $2.75 billion and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $250 million and $270 million. Both were less than expected.

The news sent Grab Holdings shares down 6% to $3.16 as of noon ET Thursday, moving into negative territory for the year.

Grab Holdings, the Asian ride-hailing giant, reported lower-than-expected revenue for the second quarter of the year. The company’s revenue rose 17% year-over-year to $664 million, missing analysts’ estimates by $16 million. The loss per share of $0.01 was in line with forecasts.

While Grab saw a 19% increase in on-demand users, the average spending per user declined by 6% to $121, which was below expectations. However, the company experienced growth in other segments, with deliveries revenue climbing 11% to $356 million, mobility revenue increasing by 19% to $247 million, and financial services revenue soaring by 54% to $60 million.

Despite these positive growth figures, Grab’s full-year revenue and adjusted EBITDA guidance fell short of analysts’ forecasts. The company expects full-year revenue to be in the range of $2.70 billion to $2.75 billion, and adjusted EBITDA between $250 million and $270 million. Both figures were lower than expected, leading to a 6% drop in Grab Holdings’ stock price.

This decline in rider spending and the soft guidance provided by Grab Holdings has raised concerns among investors. The company’s stock price fell to $3.16, pushing it into negative territory for the year.

Grab Holdings, which operates in several Southeast Asian countries, faces increasing competition from other ride-hailing and delivery services. The decline in rider spending could be attributed to factors such as increased competition, changing consumer behavior, or economic uncertainties.

The company’s financial services segment, which includes digital payments and lending, has been a bright spot, with revenue soaring by 54%. This growth reflects Grab’s efforts to diversify its business and expand into new areas beyond ride-hailing.

Grab Holdings’ second-quarter performance highlights the challenges faced by ride-hailing companies in a competitive market. As more players enter the industry and consumer preferences evolve, companies like Grab need to adapt and find new ways to attract and retain customers.

Despite the current challenges, Grab Holdings remains optimistic about its long-term prospects. The company continues to invest in technology and expand its services to stay ahead of the competition. Grab’s focus on financial services and its commitment to innovation could help drive future growth and improve its financial performance.

However, the decline in rider spending and the soft guidance provided by Grab Holdings indicate that the company needs to address the challenges it faces in the ride-hailing market. By understanding the factors contributing to the decline in spending and taking appropriate measures, Grab can regain investor confidence and drive its stock price higher.

In conclusion, Grab Holdings’ second-quarter results showed lower-than-expected revenue and a decline in rider spending. The company’s full-year revenue and adjusted EBITDA guidance also fell short of analysts’ forecasts. These factors led to a 6% drop in Grab Holdings’ stock price. Despite the challenges, Grab remains focused on diversifying its business and investing in technology to drive future growth.