Grab Thesis & Current Thoughts – 6/20/25

Introduction

Alright, it’s been about 6 months since I first initiated my Grab thesis. The stock is ironically at the exact same price. The market has quite the way of humbling you as you begin to navigate it.

Look, I’m just as annoyed as many of you. With high flying names up 3-4x in the same time span, I have had around $100K sitting in Grab pretty much doing nothing. It is very, very annoying. However, this is also the beauty of investing. Right now, the market is essentially saying that I am wrong. The most asymmetric gains I have seen are when people went against what the market was saying, chose to find the bull case around a name, and eventually saw their thesis play out.

This is a moment where you have to test if you have conviction. Conviction truly comes not when a stock is on its path to glory, but in the dog days of the stock barely moving even when you think the fair value is substantially higher than where it should be. Fortunately for me, I have been through this twice with Palantir and Robinhood. Both of those names spent 18-24 months stuck in a range and I had to constantly question myself throughout the process, but eventually the names became the names that changed my life. Now, I don’t know if Grab will be that third name for me. Quite frankly, I really want it to be. I have not publicly associated myself with many contrarian names outside of PLTR, HOOD and now GRAB. I am bullish on various stocks like NVDA, TSLA, etc. but attaching your name to a stock’s trajectory is usually reserved for certain companies, and Grab is my third pick. Am I biased? Yes. But I am not emotional – if something in the thesis easily breaks, I will exit. However, I see the thesis only getting better and better even though the share price is not following, which is why I am up at midnight right now writing this.

Honestly, now I just want to see how this story plays out. My price target is $10 by 2027. I may be completely wrong, slightly wrong, or completely correct. Time gets to tell. Below I will walk through all my bullish and bearish scenarios. I don’t have much interest to obsess over the day-to-day with the company now, at this point it is up to them to execute and if they do it correctly, shareholders should be rewarded. If not, the company will not go bankrupt (in my opinion) but the share appreciation will lag compared to the rest of the market. It’s not really a boom or bust type of scenario, it’s either a boom or just keep waiting scenario…waiting is fine, but the question is how long. Below I explain all my current thoughts on the nature of how this could play out.

Why I began following the name

My simple thesis for Grab is around growth. I believe Southeast Asia is going to be a monster emerging market in the next decade and Grab will be able to consistently compound their network effect by 20% every year. The company currently is trading at 47% cash, meaning for every dollar you buy of Grab, you are buying 47 cents of pure cash. The company was trading at 30% cash when I first bought it, so they have increased their cash position by nearly 20% without diluting shareholders (we’ll talk more about that later) leading me to believe that they are ready to use that cash to fuel their runway for consistent 20% growth. That’s my thesis – heavy cash on the balance sheet, expanding growth (GAAP profitable, FCF positive, adjusted ebitda growing 50%+) and as a result, I see it as asymmetric.

Now, the biggest issue with Grab is that their margins are not good. I knew this going into the thesis. My argument against that was as the company gains operating leverage, their margins will increase, and the cash on the balance sheet will cushion most of their efforts to get that margin expansion with their topline revenue growth. The market should understand that as a very, very simple growth story that they have seen plenty of times before (Uber, Amazon, etc) where a company spends to establish dominance and then monetizes after. Grab’s true moat will be revealed when their margins go up and they continue to grow because it means people will simply choose to keep using their product over the competitors. I think this is already starting to play out in many ways that we’ll discuss below, but if it continues to grow in this path, I don’t see a world where the street ignores that growth long term.

User Growth

Grab has 45M monthly transacting users, 7M daily, 119M annually.

It is not easy to bring users onto a platform and keep them there. Part of the issue with B2C companies is having the ability to meaningfully bring on new users and monetize them over the lifetime of them engaging with the product. For the past 2 years, Grab has grown their users every single quarter. As of Q1 2025, during some of the toughest holiday months, Grab was still able to grow their users. Now, there are 700M people in the SEA region. This means their penetration is less than 6%. Many of these people are just entering into the digital age, which means they will need a bank (Grab offers that) mobility, and deliveries – along with all of the other things the app provides which is the superapp thesis. Are their competitors? Yes. Have they been able to grow the user base like Grab? No, and they haven’t shown the ability to keep users engaged while spending the money necessary (which leads to the bad margin argument) to keep them on the platform. As a result, I see the UX of Grab as one of the defining parts of this thesis and if they continue to grow the topline users, the rest of their flywheel will take place across the merchants (advertising, loans, etc) and their financial business because you need new users to fill that pipeline.

High Margin Opportunities  

Two incredibly large opportunities for Grab are advertising and financial services. Their financial services business is growing about 40% YoY and is not profitable yet on an adjusted ebitda basis but the company is guiding for them to be breakeven by 2026. I think this could happen sooner, but even if it doesn’t, the beautiful part about this business is that there are so many ways for them to monetize the underbanked population of the SEA region. Once you have your money with Grab, you are also more likely to use the other products they put out (and vice-versa). Financial services will be a cash machine for them in the future and the growth outlook here is pretty obvious, they need to do a good job managing their risk with loans (which they have so far) but once you have millions of people on the platform, giving loans to merchants who need extra money in their restaurant to supply orders or loans to consumers who need extra money to pay rent becomes a massive opportunity for them that they can easily tap into leveraging their network effect.

Advertising is another huge opportunity – as of Q1 2025, they had 191K active advertisers which is only 3% of their 6M merchants. Their take rates on ads is about 1.7%, increasing YoY, but still relatively small. Grab has a HUGE opportunity to penetrate advertising much deeper into the platform and can overall increase their margins without even increasing their mobility/deliveries take rates by emphasizing the advertising opportunity. Now, why would advertisers use Grab? Because they have the users. It is one of the most exciting network effects that can begin to meaningfully scale, but they need to continue building out the targeting technology that Advertisers like to use while growing the topline user base to get those ads to be effective.

The point here is that when you are investing in growth stocks, you are looking for S curves of growth that have a long runaway. With Grab, just on advertising and financial services alone, these two should be huge cash cows for them in the coming years as they continue to increase their margins and penetration with their userbase. If they continue to execute, these will only be broader parts of the thesis that make the current valuation look silly compared to how large these elements of the business can become.

Consolidation in the region

I will talk more about what I think Grab may be ready to do with their large cash pile, including potential acquisitions, but regardless of Grab buying competitors, natural consolidation is happening in the region.

This is another big part of my thesis on why I want to be long Grab: there are too many players in mobility/deliveries and eventually they are going to die out. There are various small and local competitors all throughout Southeast Asia but the only way they survive is if they are able to burn the amount of cash that Grab is burning in order to get users on to their platform. Part of the reason Uber didn’t succeed in SEA (we’ll talk about that later as well) is because they didn’t match the cultural values of citizens in the region, even if they had the cash to burn. The smaller competitors in the region can match some of the cultural values of Grab in communicating with users, but they DO NOT have the cash ready to burn. This is what puts Grab in a very optimal scenario: they can keep burning cash, building out their network, and as soon as the natural or inorganic consolidation takes place – margins can start trending upwards (what we are already seeing) and when companies increase operating leverage, the market tends to follow with share appreciation as net income begins to meaningfully grow.

CFO Peter Oey on consolidation, Q1 2025 earnings call:

“Let me take the first one around consolidation. Maybe, Alex, if I can ask you to take the Indonesian specific question there and what you're seeing. Maybe you can share a little bit more color there. I think when it comes to consolidation, it's hard to predict. I can't comment really in terms of how the delivery market will shape up in the future. We've been focusing a lot in continue to grow our delivery segment of our business. It grew at 17% on a year-over-year basis. We feel it's under-penetrated, so there's still ways to go in growing that business. So we're heads down executing that, and Alex spoke about some of the products that we've been sharing, and also through our GrabX also, that you're seeing to continue to bolster that growth in the business. We also want to drive more engagement also at the same time with our set of deliveries products. So we're going to continue to make sure that we increase the number of users on our platform on deliveries. Organic has been working nicely for us, and we're going to continue to execute that business. Competitors come in, competitors go, as you've said also. But we're continuing to make sure that in this environment that we're in, we have to continue to make sure our products are affordable, which is really important for our users. And the selection also continues to widen, which is where we've been focusing around, for an example, around areas of bolstering our mart products, as well as continuing to bring traffic to our merchants in-store at the same time. So that's how we see the market landscape, whether you'll see some more consolidation, who knows, but we're going to continue to grow our market share.”

One noticeable exit from the region is Foodpanda in Thailand a few months ago. They were losing money for the past 10 years and finally, enough was enough. There are plenty of more competitors in Thailand, but the more that naturally realize they don’t have a path to profitability…the more Grab has a chance to continue taking market share as the leading superapp.

Grab has also engaged in many acquisitions already that have begun to strengthen their positioning.

Alex Hungate COO Q1 2025:

“So just to summarize, we purchased Chope, the reservation application which we have now reproduced as native inside the Grab app. So that is helping the customers in their workflow as they identify where they want to dine out, which is a new capability that we're growing on the platform. They can now also take the next logical step, which is to make a reservation. We also purchased Everrise, which is a retailer in East Malaysia, which extends the Jaya footprint into now a nationwide leading grocer, which is helping to strengthen the frequency and the reach of our offerings of the ecosystem in East Malaysia. And then finally, GXS Bank, our banking subsidiary here in Singapore, purchased Validus, which is supply invoice financing capability, which would have probably taken us a while to build on our own, but is a logical extension to support the small businesses that operate on our platform and to extend credit to them in a risk-managed way because it's based on the payment credit of much larger companies that can operate in the ecosystem. So those are all great examples of how we are seeing in this environment that there are indeed undervalued acquisition opportunities that we can bolt onto the platform that can help us to generate value right away and accelerate our time to market.”

It’s not like Grab doesn’t know how to purchase companies and incorporate them immediately into their network, it’s just that they have a high standard to make sure the acquisitions are synergistic. I believe that consolidation in the region should continue to help position in the company to be a leader within the region across various dimensions.

Everything is just beginning to trend higher

Throughout history, buying stocks when they began to inflect and show operating leverage through free cash flow, adjusted ebitda, net income, etc. has been the right time to buy stocks.

The market always looks forward to the future and stock prices reflect what the company will look like in the future. The reason why growth stocks get such premiums compared to the rest of the market is because if they can use their technology to create leverage and infinite scale, the possibilities on where their net income can go is endless. Now, Grab is not producing tons of GAAP net income – they are doing about $10M a quarter, which is nothing. However, their margins are trending towards the direction where they will start doing much more than $10M and their adjusted ebitda is growing 50%+ which signals how strong they are getting at turning their topline revenue into real free cash flow.

This is the time to buy stocks. You can always buy NVDA when the story has become obvious, but when NVDA was beginning to show more operating leverage within their growth story, that’s when you need to get into the story if you believe they can sustain it. Grab has the tailwind of the entire SEA region compounding at 7% over the next decade in terms of GDP and if they are the dominant player as the smaller players die out and they continue to win marketshare, these numbers should only look better. From 2021-2023, there really was not a growth story towards this stock because the bottom line numbers looked horrible. Starting in 2024, they started decreasing regional corporate costs every quarter and really began focusing on their margins which is why we are beginning to see real net income. I just feel at these levels, trading at 50% cash, and numbers inflecting to the upside – all the metrics anyone would care about – is where the opportunity becomes asymmetric to me.

What was also very important to me in Q1 2025 was how well the company did in a quarter that usually does bad because of holidays – this tends to be one of the weakest quarters for the company, but they beat expectations across the board and raised EBITDA guidance…

CEO Anthony Tan:

“While we are cognizant that there are increased levels of uncertainty in the global macroeconomic landscape, we remain committed to the mission of our company, and believe that it is more important than ever to drive further improvements in the reliability and affordability of our services. This will increasingly position us as a countercyclical company, enabling us to stay resilient and continue driving new user growth and improvements to usage frequency and retention regardless of the macroeconomic landscape.”

In fact, one of the regions their margins for mobility were slightly down YoY in Q1 was because they needed to spend to make sure their supply side on drivers was strong because they had so much demand for rides – while that hurts their margins, it is a good problem to have because it shows that the actual product is being chosen over others and if they can just continue to build out the supplyside/overall network, they will eventually be able to grow their margins as they become to core product that everyone in the region wants to use.

Here’s a take around demand/supply dynamics from this article that I also agree with:

“The second opportunity lies in demand aggregation. Unlike Uber, where mobility is its core business, Grab's biggest business segment is actually its food delivery business, and it also has a very robust financial services business. This opens the door to becoming a demand-driven platform, converting food delivery or financial service users into mobility users via bundled subscriptions (e.g., GrabUnlimited). Drivers will want to be on Grab, not just because of commissions, but because it's where the demand is. That's a very different dynamic from the Uber playbook, where it has largely leveraged its large base of mobility users into its food delivery business.”

Uber used it’s mobility business to then build out new products whereas Grab’s largest business is actually deliveries and quickly becoming financial services…if they can utilize those two parts of the business to then introduce more people to mobility (and vice versa) or to subscription offerings like GrabUnlimited, then that will also continue to get supply to come to the platform. Uber worked to build supply in the early days whereas Grab is seeing so much demand that the demand itself might help fuel more supply, aiding the network to become very strong.

Why is Howard Marks buying?

This is something I think about daily. Howard Marks is a legendary investor. His firm, Oaktree Capital, bought 10M shares in Q1. Some other notable investors are Ray Dalio who is in for 6M shares and Chase Coleman of Tiger Global started buying in 2022 and now has 92M shares, he has not bought for the past few quarters but has also not sold. I am going to be very curious to see if Marks continues to add to the position over the coming quarters – I don’t think he bought at $4.50 to sell it at $5, it seems like this was a starter position and a bet for him on an undervalued asset inside of an emerging market. Marks has been a distressed debt and credit investors his whole career, he doesn’t buy Doordash or Uber or Shopify…one can argue that Grab is a combination of all those companies and for him to buy a tech stock signals to me that he thinks there is a specific opportunity here that he wants to take advantage of. Maybe he also wants to hedge against the US by going international, but it really makes me wonder why he decided to take a chance on Grab. Many people point to Grab’s 4B outstanding shares as an issue, and I agree, there are many shares outstanding. However, 3.2B of the shares are locked up by the tutes with 80% institutional holdings including Uber, Toyota, Softbank, Norgesbank etc. The company has really seen institutional holdings beginning to take off in the past year and it also signals to me that we should not be ignoring that the big guys are locking and loading their shares. I think retail will get interested if the stock can meaningfully stay above $6 and when it gets to $7, I think it will really get a bid, but the big guys are in.

Autonomous Vehicles

Many people have asked if self driving is a threat to Grab. The answer in my opinion is no for some simple reasons: Grab has already begun exploring AV partnerships in order to prepare for more self-driving vehicles in certain markets they operate in, SEA region in general is not ready for self driving, and governments won’t easily allow jobs to go away.

So, Grab has already begun working on AV partnerships.

Alex Hungate, COO on Q1 2025 earnings call:

“Yes, I think we are very excited also about the potential for AVs. That's why we wanted to lean into this space and take a very early stance working with partners. You can see a lot of people keen to work with us. I think our leading position in the region obviously makes us an attractive partner, but also the fact that we're leaning into AI at the same time. So I think we're hopefully a knowledgeable partner for them to work with also.

Our intention is to really be at the forefront of the exploratory use of this new technology. I won't give you a timeline for pilots because we obviously are in discussion with various governments to get that going. But our intention is to be at the absolute forefront because we want to understand what it's going to take to make this successful. Obviously, fleet operations is something we're very familiar with because of the way we manage our own fleets today. But what will fleet operations look like for the for AVs, for example.

We're also at the forefront of insurance. We have our own general insurance license. We've been distributing insurance in every market for some years now, and that's a very successful, profitable, and growing business. But that helps us to become a good partner for these companies also in understanding what the insurance capabilities would be necessary to make them successful also.

So I would say, as you said, early days, but you can think of Grab as one of the companies globally that is really leaning into this space.”

I don’t think a pure self-driving play will happen without a massive fleet which is what Grab can provide so I see them as playing a pivotal role here. However, many parts of the SEA region just aren’t ready for a self-driving car to navigate the roads. I could see it happening in Singapore and Malaysia but not in Thailand or Indonesia. It’s just going to take a ton of time for training these models, let alone in the United States where self driving seems like a real possibility, but for these other regions across the world. In that time, people will still need to transport themselves and that’s where Grab will be able to grow if they continue to gauge market share.

Finally, governments in the SEA region aren't going to let AV’s just take away jobs. Grab plays a massive role in the GDP of so many of these countries and are under strict regulatory scrutiny as well, so the idea that governments just let all these people go out of work and lose their jobs because it would  help Grab’s margins is unrealistic to me. I could see it working for Uber in North America if they are able to replace the driver by gaining a massive AV fleet, but I just don’t see that easily happening in the SEA region.

Financial services

This is going to be one of the gems of Grab’s business for years to come and quite frankly, one can argue that the mobility and deliveries part of their business is just to get people to come into the financial services part.

Financial services are growing at about 40%, the fastest growing part of the business, and Grab expects the sector to break even by the end of 2026. While fintechs are an incredibly competitive business, the tailwind that Grab has is that almost half of the people in the SEA region are underbanked. This means if Grab can create brand awareness with all these users with ride hailing or deliveries and then continue to occupy their mindshare, eventually they can promote a banking product or payment product to them which would lead to more net deposits.

COO Alex Hungate Q4 2024 earnings call:

“And then the financial services side, I think you can see from some of the slides that we sent out this morning. There's great acquisition opportunities. 90% of the GXBank customers in Malaysia came from Grab and the acquisition cost is minimal. The speed at which we've been able to gather deposits and open new accounts we're now up to 4 million new accounts across the three banks is very, very pleasing indeed. And it shows the power of the ecosystem and the brand in low customer acquisition and cross-sell.”

Q3 2024 earnings call:

“We are very carefully whitelisting users for that product using the data models. And that means that we will maintain a very careful look in terms of risk appetite. But overall, between GFin and the banks, our nonperforming loan ratio is still around 2%. So that's extremely good performance from those credit models. Then on – obviously, to fund that, the benefit of having a banking license is we get access to very low-cost deposits. And what we've been delighted with since the launch of all three banks is our ability to attract those deposits. We've been able to bring in deposits much faster and with less cost than we had even planned. So you've seen that the positive momentum across GXS Bank in Singapore and GXBank in Malaysia, where customer deposits have grown 50% quarter-on-quarter. So over $1 billion now in the third quarter. And then Superbank, which is the Indonesian bank, which only just launched in July, hit 2 million accounts by October by last month. So a really tremendous uptake. So we are able to raise deposits at a very low cost. And therefore, because of the focus we have on data science and the lending model, you can see very clearly that we can continue this very positive data flywheel for lending,”

There is a massive network effect that is happening in financial services. When Grab gets a user in their bank, they already have tons of data on how they interact with the world. They can then tailor specific recommendations for loans to that user with favorable terms. This goes for merchants as well. A merchant can advertise with Grab for their restaurant, use Grab to deliver their food to the consumer, and then get a loan from Grab to continue growing their business. This type of network effect is only going to compound over the coming years as their underwriting continues to remain strong due to AI + the data advantage they have on users and merchants which will further allow their loan book to grow and create high margin revenue. I think there are many other types of financial services Grab can offer, but the goal here is to get deposits into their banks and make them profitable which it seems like they are on a clear trajectory to do. The most exciting part about this part of the business is again how many people in the region don’t have access to financial services. Grab simply needs to keep taking market share in the core parts of their business (which they are showing with user growth and consolidation in the region) and then they will be able to get users into the financial services part of their business if their brand loyalty is strong. This is a massive growth vector and although it is not meaningfully contributing to the bottom line yet, the story here is quite obvious and feels like when it scales, it will scale aggressively.

Grab’s first product live stream event on April 8th, 2025

So, Grab really surprised me when they hosted their first product event on April 8th. Given my history of covering Palantir and Robinhood, one of the inflection points for both of those companies was when they decided to start hosting in person events. Why? It’s because they had products to show off and they weren’t afraid to show the world all the new things they were working on. Tech companies live and die based on their ability to keep innovating on products. Product velocity is the lifeline on how companies build services to keep users engaged and continue to expand their TAM. From the people I spoke to in the region, most of them said that companies native to the region never host these types of events. They don’t do livestreams with the CEO on stage speaking about their new products, and to be honest, the event on April 8th was not the most amazing event. There were some production issues that made it look mediocre – but the fact that they tried to do an event and get their message out there to me is very encouraging about their product velocity. I think they will be doing this event every year and forcing themselves to keep putting out new products.

At the first event, the company put out:

• GrabFood for One
• Grab for Family | Teens
• Shared Saver
• Advance Booking (Airport Pickup)
• Dine Out Discovery (Powered by GrabMaps)
• Grab Travel Pass

I believe more of these products are going to be introduced and if the products drive more user engagement, it should lead to more topline growth. When B2C companies already have a massive network (like Grab has with 45M monthly users) then introducing new products to those users is a very easy thing to do – the question becomes if the products are valuable enough to gain traction. From the products they announced at the recent event, the dine out discovery, food for one, shared server, and airport pickup genuinely look like products that can meaningfully drive more engagement and topline growth. If GRAB can put out 5-10 new products a year that incrementally deepen user engagement…the moat will only deepen on the platform’s stickiness and the increased consolidation in the region with sticker products should just position the company to dominate over the next decade.

Valuation

One article’s take I agree with:

Grab's stock is projected to reach a $10 price target, offering a potential 100% return, based on conservative financial estimates. Analysts forecast EBITDA growing from $313M as of 12/31/2024 to $779M by FY26 and $1.06B by FY27, implying a 50.6% CAGR. Assuming a more cautious $900M EBITDA by 2027 (below analyst estimates, even with the potential GoTo acquisition) and a 30x EV/EBITDA multiple (comparable to Uber and DoorDash), the enterprise value would be $27B. Adding $8B in cash, the total business value reaches $35B, equating to $8.54 per share with stable shares outstanding. A more optimistic 60% EBITDA CAGR and a slightly higher multiple could push the stock to $10. While not a high-risk, high-reward opportunity, Grab’s path to $9–$10 appears achievable, especially if the GoTo acquisition accelerates growth.

Here’s another valuation model I like quoted from this article which assumes:

2034 Deliveries GMV of $33.3B (11% CAGR) at a 4.5% Margin, inline with management's long-term margin guidance.

2034 Mobility GMV of $24.1B (14% CAGR) at a 9.5% Margin, inline with management's long-term margin guidance.

2034 Financial Services Revenue of $2.4B (25% CAGR) at a 35% Margin.

Altogether, this should produce Cash Flows (Adjusted EBITDA - CapEx) of $2.9B by 2034.

Perpetual Growth Rate of 2.5%.

Discount Rate of 10%.

The model was done when the price was $5.01, now it is $4.50:

So, I think the stock is trading below its intrinsic value. The risk to the downside seems very low from these levels and if we see anywhere below $4, I would meaningfully allocate even more of the portfolio to gain exposure. I believe this mispricing is due to the market’s bearishness around the sustainability of their growth, the fears that the FCF will not be brought down the bottomline, the general necessity to see more progress on the overall margin story, and the lack of understanding for why they raised so much cash. When we get those answers, I think the stock starts to move as well.

Why did the company just raise $1.5B of cash?

Now, this is the part of the thesis that really has me scratching my head in a good way.

The company initially filed for a $1.25B convertible note raise 2 weeks ago. Then, a few days later, they upped the size of that offering to $1.5B.

So, it seems to me that Grab is raising this $1.5B from a position of strength. They did NOT need to do this since they already had $6B, which means it seems like they raised the money with a plan. They also raised at a 0% coupon so there is no interest on the money.

Now, the question to me is why the round was as oversubscribed as Peter described it to be. Oversubscribed essentially means that there was so much demand from investors to give Grab their money that Grab had to raise the size of the offering in order to accept everyone’s money, again, at a 0% interest rate with a 40% conversion rate (which means if the convertible note converts, the bond holders would make 40% on their shares from the closing price of the deal at $4.68). It seems like the reason it was oversubscribed is because the people giving them the money believe they are going to do something important with it, whether it's an acquisition or something else, it does look like Grab has a plan and investors are ready to back them to execute that plan.

Here’s with the CFO said about the raise:

Well, what’s the plan?

Anyone who has been following the Grab story knows that they have been in serious negotiations back and forth with acquiring one of their largest competitors in Indonesia, GoTo. One of the reasons Grab doesn’t have the best margins is because of competition. Now, GoTo can’t really afford to keep burning cash to compete with Grab. They aren’t profitable and their stock is down 80% all time. Grab is profitable, hasn’t had the best stock performance, but due to their cash liquidity – is it very little risk of going bankrupt. They just raised $1.5B with no problem. GoTo is not going to be able to easily raise money if they don’t have a path to profitability and as of right now, it seems like they do not have a path to profitability.

So, should Grab buy GoTo?

Yes, but only for the right price. I would not want them to acquire the company for 7-8B, which is the rumored premium that people think they may be trying to buy them out for. The company itself is really barely worth 3-4B. If we get a good deal, it makes sense. If we overpay, it might not be the worst since getting rid of the biggest competitor in the biggest market in the SEA region may be worth it…but the question just becomes how easily Grab will be able to increase their margins if they were to buyout the company or even just the mobility/delivery part of the company. Maybe Grab has other acquisition targets in mind. Maybe they are going to really ramp up their financial services and need cash on hand to back up their loans. I have no idea what the company is going to do with the cash on hand, but I do know that almost 50 cents on every dollar that I buy in this stock is just buying cash. With all the fundamentals pointing to the right direction and the enterprise value trading at just 3x sales, it just feels there is going to be some bigger move happening with the cash that could change the entire trajectory of the business.

Also, if they just throw that $1.5B into US treasuries and get 4% on the money, that’s an extra $60M a year that can flow to the bottom line. I imagine they have other thoughts on doing something with the cash outside of parking it in treasuries, but if they really were to do nothing, it still should generate some net interest income for them that also helps with ebitda and net income throughout the year.

Conclusion

Ultimately, I think the stock is undervalued. I think the growth story is very obvious. I am finishing up the writing of this document on Sunday, June 22nd and relistened to the Q1 2025 earnings call last night again. Although the stock has been annoying, what was important for me to hear yesterday was what the actual thesis is on long term growth. The network effect, brand and ecosystem that Grab has built is just not easy to replicate. It isn’t the most profitable yet, but it has turned a corner on all the metrics that matter in order to become sustainably profitable, which is when I think is the time to decide if you really do believe in the story or not. With half the market cap trading in cash, the position seems relatively derisked to me, but it comes down to their ability to continue to execute and increase margins. I believe they will do that, but that is the bet I am taking.

Please remember nothing written in this document is financial advice, I am not a financial advisor, I just am expressing my thoughts on the future of this company.

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Thank you for reading!

• Amit