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Why Grab Holdings Sank 64.5% in the First Half of 2022

What happened

Shares of Grab Holdings (NASDAQ: GRAB) plummeted by 64.5% in the first half of 2022, according to data provided by S&P Global Market Intelligence.

The Singapore-based ride-hailing and food delivery company completed a $40 billion merger back in December last year and opened at $13.06 but promptly started tumbling thereafter.

Image source: Getty images.

So what

Grab's first set of earnings for its fiscal 2022 first quarter showed continued growth in operating metrics. Gross merchandise value (GMV) climbed 32% year over year to $4.8 billion, while the number of monthly transacting users rose 10% year over year to 30.9 million. The company also reduced its total incentives as a proportion of GMV, thus enjoying better economics.

Its ride-hailing business saw GMV rise by 32% between February and April as the effects of the omicron variant wore off, and the business has ramped up its supply of drivers by 220,000 in the last two quarters to cater to this increased demand.

Despite these numbers, investors were probably spooked by Grab's continued losses. The company saw just a 6% year-over-year increase in revenue to $228 million but incurred a net loss of $435 million. Although this loss was 35% lower than the previous period, it still showed how much cash the ride-hailing company is burning to build and grow its network of users.

Now what

Grab expects to see around 30% to 35% year-over-year growth in its GMV for the full year. Meanwhile, the company is working with renowned global partners such as Starbucks (NASDAQ: SBUX) to extend its presence. The partnership with the coffee giant will cover six markets -- Singapore, Malaysia, Indonesia, Thailand, the Philippines, and Vietnam -- and will allow customers across these countries to earn Starbucks Rewards through their Grab apps.

Grab is also eager to grow its financial services division, and the recent clinching of the Malaysian digital-bank license together with partner Singapore Telecommunications (OTC:SGAPY) will enable the company to target financially underserved gig-economy workers with a suite of financial services. Small and medium-size enterprises that form a backbone of Malaysia's economy can also be better served.

The company is also eager to expand its range of services beyond ride-hailing, food deliveries, and financial services. Just last month, it launched GrabMaps, a mapping and location-based service targeting businesses. This service is being pushed out in seven out of eight countries in which Grab operates.

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Royston Yang has positions in Starbucks. The Motley Fool has positions in and recommends Grab Holdings Limited and Starbucks. The Motley Fool recommends the following options: short July 2022 $85 calls on Starbucks. The Motley Fool has a disclosure policy.


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