We came across a bullish thesis on Grab Holdings Limited (NASDAQ:GRAB) on Twitter by amitisinvesting. In this article, we will summarize the bulls’ thesis on GRAB. Grab Holdings Limited (NASDAQ:GRAB)’s share was trading at $4.74 as of Jan 2nd. GRAB’s forward P/E was 71.94 according to Yahoo Finance.
A close up view of a hand holding a smartphone, using a ride sharing app.
Grab (NASDAQ:GRAB), a Singapore-based superapp, is a dominant player in Southeast Asia, providing ride-hailing, food delivery, and digital payment services. The company’s strategic moat lies in its ability to customize its offerings for each Southeast Asian market, integrating transport, food delivery, and payments within its super-app. Grab’s position is further strengthened through key partnerships, such as its deal with Uber, which ceded the region to Grab by taking an equity stake instead of competing. Additionally, Grab supports financial inclusion by offering microloans and facilitating payments for a wide customer base, adding to its appeal in a rapidly growing market.
The company’s stock has surged 52% year-to-date, a result of its breakout from a consolidated price range between $2 and $4, after more than two years of stagnation. Grab reached GAAP profitability in the last quarter, reporting a $15 million net income, and has raised its EBITDA guidance by 15%. This positive momentum has also led to a $500 million share buyback program, signaling confidence in its future prospects. Grab now boasts 42 million monthly transacting users, which is a key growth driver.
Despite being valued at an enterprise value of $14 billion, with $6 billion in cash, Grab’s price-to-sales ratio is 7, which is reasonable compared to other emerging market companies. The company’s P/E ratio is currently non-existent due to its recent profitability, but if Grab sustains this positive trajectory, it could be seen as an undervalued growth stock by the market, especially in a market like Southeast Asia that is still expanding rapidly. The company’s P/FCF ratio stands at 31.54, but this is expected to improve in 2025 as Grab’s free cash flow margins continue to improve.
The real appeal of Grab lies in its founder, Anthony Tan, who has displayed immense drive and commitment to building the company. Tan’s personal sacrifice, including a strained relationship with his father, speaks volumes about his dedication. Having fought for Grab’s success against formidable competitors like Uber, Tan’s leadership has been pivotal in transforming Grab into a household name in Southeast Asia. With strong fundamentals, increasing profitability, and a dedicated founder at the helm, Grab’s stock could reach a price target of $10 by 2027, potentially sooner, as it continues to expand margins, grow revenue, and enhance brand presence.
Grab Holdings Limited (NASDAQ:GRAB) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held GRAB at the end of the third quarter which was 34 in the previous quarter. While we acknowledge the risk and potential of GRAB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GRAB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.