Grab Tumbles On Nasdaq Debut After Record SPAC Merger; Investors Fret Over Losses

Anthony Tan and Tan Hooi Ling celebrate on stage during the bell-ringing ceremony for Grab\’s listing … [+] on the Nasdaq in Singapore on December 2, 2021.

Ore Huiying/Bloomberg

Shares of Grab Holdings tumbled on its first trading day on the Nasdaq, after completing the world’s biggest ever merger involving a special purpose acquisition company, or SPAC.

While the merger with blank-check company Altimeter Growth Corp. valued the Southeast Asian superapp giant at $40 billion, some analysts questioned how a loss-making company could be so highly prized. Though the valuation for Grab is based on assumptions that digital adoption across Southeast Asia will rapidly increase, the company will have to show that it can be profitable, said Justin Tang, head of Asian research at United First Partners in Singapore.

“A lot of these big assumptions will have to crystalize; it cannot be just a concept,” Tang said. Grab slumped 21% to close at $8.75 on Thursday in New York, after touching an intraday high of $13.06. The company declined to comment on the share price performance.

Cofounded in 2012 by Anthony Tan and Tan Hooi Ling (no relation) as a taxi-booking app, Grab has grown to become a superapp by expanding its business to ride-hailing, food deliveries and digital financial services. Despite its rapid expansion in recent years, the company has sank deeper into the red.

Last month, Singapore-based Grab reported its net loss widened to $988 million in the third quarter, from $621 million a year ago, due to exceptional charges and a general decline in the ride-hailing sector following a renewed spike in Covid-19 infections across Southeast Asia, particularly in Vietnam. “The current environment is not exactly conducive to its business model,” Tang says.

But with the company operating in more than 400 cities across Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, some analysts believe there are enormous opportunities for Grab.

“Southeast Asia is at the cusp of a major digital transformation—60 million people entered the digital economy because of Covid,” Nirgunan Tiruchelvam, head of consumer equity research at Tellimer, said in a LinkedIn video ahead of Grab’s Nasdaq debut. “This raises the scale of opportunity for Southeast Asia’s ride-hailing and food delivery giant Grab.”

Southeast Asia is among the fastest growing regions in the world, with gross merchandise value from the digital economy climbing 49% to $174 billion this year from the previous, according to a new study jointly published by Google, Temasek and Bain & Company in November. As consumers across the region increasingly embrace e-commerce and other digital platforms, the study predicts Southeast Asia’s GMV to grow to $363 billion by 2025 and surpass $1 trillion by 2030. 

Grab celebrated its Nasdaq listing in Singapore on Thursday evening in a festive event attended by some 200 staff, drivers and merchant partners. “Today, we shine a spotlight on Southeast Asia and how its homegrown tech companies are powering new possibilities for the region’s 660 million people,” Grab group CEO Anthony Tan said.