Grab Holdings (GRAB), the largest special purpose acquisition company (SPAC) merger ever, is having a dismal run this year. It fell to its 52-week lows on Friday, Sept. 18, and is down nearly 44% for the year. It is a penny stock even as the market cap is above $11 billion.
Meanwhile, thanks to the sharp decline in GRAB stock, its valuation has plummeted, and it trades at a forward price-to-earnings (P/E) multiple of 21.50x with a P/E-to-growth (PEG) multiple of 0.73x. The P/E is at a historical low and looks particularly attractive given the nearly 25% topline growth the company is expected to post this year. The earnings per share (EPS) estimates are even rosier, with consensus estimates calling for a 116% rise this year.
SpaceX Has Huge, Unusual Put Options Volume - Is SPCX Set to Fall or Rise From Here? Lucid Just Struck a Partnership With Bolt on Mobility. What This Means for LCID Stock.
Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sell-side analysts are quite upbeat on Grab, and of the 16 analysts covered by Barchart, only one rates it a "Hold" while the remaining rate it as either a "Strong Buy" or a "Moderate Buy." The stock trades below its Street-low target price of $3.25, while the mean target price of $5.88 implies the stock can more than double over the next year. While the headline valuation numbers suggest that Grab is a growth stock worth "grabbing," it has been falling for a reason(s).
Here are some risk factors weighing on Grab. Regulatory Risks: While nearly every company faces regulatory risks and these boilerplate challenges are omnipresent in annual reports, they are quite prominent in Grab's case. The company operates a ride-hailing and delivery business in Southeast Asia, and like other companies in the business, it relies on the take rate, or the commissions that it charges on the passenger's total fare.
Indonesia has capped commissions for two-wheeled ride-hailing services from 20% to 8%. After protests by drivers, Vietnam is also reviewing the commissions that Grab charges and has asked the company for details on its fare-setting policies and commission rates. If more countries where Grab operates take a similar line, it would hurt Grab's earnings.
Extract — continue reading at the source.
