Sam Badawi
The Rise of GRAB Part 1 | HE Deep Dive 06
2/18/2025, 2:37:36 AM
Economic Summary
- Southeast Asia shows strong macro momentum: Indonesia projected ~284M population (2025) with real per capita PPP growth ~5.62% and nominal growth ~6.65%, outpacing many peers and supporting long-term consumer demand.
- USD moves matter: a stronger dollar in late Q3/Q4 was a near-term headwind for regional GDP in USD terms, but a ~3% dollar pullback year-to-date is a tailwind for local-currency growth and corporate results.
- Smartphone adoption re-accelerated from Q4 2022 through Q3 2024, with smartphone shipments up ~15% YoY in Q3 2024, underpinning digital services growth for platforms like Grab (GRAB).
Bullish
- Rapid smartphone penetration and 15% YoY smartphone shipment growth (Q3 2024) fuels user acquisition and engagement.
- Grab's super-app diversification (rides, food, Mart, finance, ads) drives higher retention and cross-sell.
- Consistent profitability trends: multiple quarters of adjusted EBITDA positivity and recent free cash flow positivity.
- $6B cash on the balance sheet (~one-third of market cap) plus a $500M buyback supports valuation.
Bearish
- Rising partner and consumer incentives (27% YoY) could depress margins and profitability.
- Strong regional competitors like GoTo (GOTO) and historical rival Uber (UBER) may limit market share.
- Near-term USD strength is a headwind to Southeast Asian GDP and FX-neutral growth.
Bullish tickers
GRAB
Bearish tickers
GOTOUBER
GRAB
Bullish
Diversified super-app with strong food/Mart growth, multi-quarter adjusted EBITDA and FCF positivity, $6B cash and $500M buyback.
Bearish
Higher consumer and partner incentives (27% YoY) could pressure margins despite revenue growth; competition remains intense.
UBER
Bullish
Uber holds a board stake that has become a strategic tailwind for regional execution and cooperation with Grab.
Bearish
As a historical competitor, Uber's capabilities and scale could challenge Grab in mobility and international strategy.
GOTO
Bullish
Strong growth in Indonesia (via Gojek/GoTo) presents regional competition and validates market demand for super-app services.
Bearish
GoTo is a fast-growing but smaller rival; growth volatility and scale disadvantages could limit its ability to dethrone larger players.
LYFT
Bullish
Illustrative competitor to Uber's U.S. playbook; limited direct relevance to Grab's SEA market.
Bearish
Not directly operating in Southeast Asia, but represents alternative global ride-hailing model and competition in investor comparisons.
VZ
Bullish
Referenced as part of channel's prior coverage, no direct impact on Grab fundamentals.
Bearish
Mentioned only as a past company covered; not central to Grab thesis or risks.
People mentioned
Sam SolidAnthony TanTang Tan LingDara KhosrowshahiChris Battelle