Seizure shares tumble as revenue tumbles on promotions and driver incentives

A Grab logo is pictured at the Money 20/20 Asia Fintech show in Singapore March 21, 2019. REUTERS/Anshuman Daga

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March 3 (Reuters) – Grab shares fell 37% on Thursday after Southeast Asia’s No.1. 1 ride-sharing and food delivery company reported a quarterly loss of $1.1 billion and a worse-than-expected decline in revenue, hit by promotional offers and higher driver incentives.

Singapore-based Grab Holdings Ltd poured money into incentives to attract drivers as ride-sharing demand recovers from pandemic lows, and also offered aggressive food delivery promotions as people started to dine more with the easing of COVID-19 restrictions.

But the incentives ate away at sales in the fourth quarter ended Dec. 31 — the first it reported as a public company — which fell 44% to $122 million.

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“We plan to be judicious and disciplined in capital allocation, as we double down on long-term growth opportunities in our on-demand, advertising and financial services businesses,” Chief Financial Officer Peter Oey said in a statement. a statement.

The loss for the full year climbed to $3.56 billion from $2.75 billion in 2020.

Grab is battling to maintain its market-leading position in the face of increased competition from GoTo, a company formed from the merger of ride-hailing app Gojek and e-commerce company Tokopedia, as well as South Asian technology company -East Sea Ltd (SE.N).

Grab shares hit a low on Thursday at $3.09, wiping more than $7 billion off its market value.

Since going public in December after a $40 billion merger with a blank check company, Grab’s stock has lost nearly three-quarters of its value.

Still, the incentives were successful in increasing gross merchandise volume (GMV), a measure of trading volumes, which increased by 26%.

Grab said he expects GMV growth between the second and fourth quarters of 2022 to jump 30% to 35% year-over-year, and predicted it would hit the threshold of profitability based on adjusted EBITDA in its food delivery unit by the first half of next year. .

“We believe the 30% stock price selloff is unwarranted,” Citigroup analysts said in a note, adding that general market weakness amid geopolitical instability may have prompted some investors to cut back. their losses.

Revenue from Grab’s mobility unit, which accounted for 86% of overall sales, fell 27% in the quarter. Revenue from its food delivery services unit fell 98%.

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Reporting by Nivedita Balu in Bengaluru; Written by Sayantani Ghosh; Editing by Shinjini Ganguli and Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

Sallie R. Loera