The Grab Holdings stock price has pulled back in the past few weeks as its growth momentum faded and competition rose. GRAB was trading at $4.55 on Monday, down by over 20% from its highest level in 2024. So, is Grab a good investment ahead of the potential merger with GoTo?
Grab and GoTo merger talks
The main catalyst for the Grab stock price is the ongoing merger talks with GoTo, another popular internet company in the Southeast Asia region. According to Bloomberg, talks between the two companies have intensified this year, and a deal may be announced later this year.
The merger would bring together two companies with a combined market cap of over $25 billion. It will help the two companies solidify their market share in the highly competitive ride hailing industry, where firms like Bolt and In-Drive have joined. Also, the merger would help them to save substantial sums of money over time.
The challenge, however, is that regulators may not approve the deal. Some of these regulators wil be concerned about the scale of the new company and job losses in Singapore and Indonesia.
Growth has slowed recently
Grab Holdings was used to triple-digit revenue growth a few years ago. The most recent results revealed that its third-quarter revenue rose by 17% YoY, with the on-demand Gross Merchandise Value (GMV) rising by 15%
Its business has done well because of the super-app business model. While Grab Holdings started its business as a ride-hailing firm, it has evolved into a super-app with more solutions like food delivery, grocery shopping, and fintech solutions.
For example, the fintech business disbursed loans worth about $576 million in the last quarter, with its bank deposits rising to over $1 billion.
Diversifying its business has helped it to attract more customers and grow its business at a time when the ride-hailing business has become highly competitive.
Grab has also focused on becoming a more profitable company in the past few years. Its operating loss moved from $93 million in Q3’23 to $38 million, a trend that the management hopes will continue.
Analysts anticipate that the Grab Holdings business will continue doing well in the next few quarters. The average revenue estimate for the fourth quarter is $760 million, up by about 16.5% from the previous quarter. This growth will lead to an annual revenue of $2.8 billion, up by about 18.8% from the same period a year earlier. Grab Holdings’s revenue will then jump to $3.4 billion in 2025, up by 21% from last year.
Grab Holdings stock price analysis
The daily chart shows that the Grab share price peaked at $5.7 in 2024 and has now dropped to $4.55. It has formed a descending channel, made up by connecting a series of lower lows and lower highs.
The stock has moved below the 50-period and 25-period moving averages, which have made a bullish crossover. It has also moved between 50% and 38.2% Fibonacci Retracement levels.
Grab Holdings stock price action will depend on how the company completes its merger with GoTo. A rebound could see it rise to the key resistance point at $5, up by about 12% above the current level. On the flip side, a drop below the key support level at $4.35 will point to more downside, potentially to $4.
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