Shares of Grab Holdings (NASDAQ: GRAB) were heading lower today after Southeast Asia's leading ride-sharing business posted disappointing results in its second-quarter results.
As of 1:20 p.m. ET, the stock was down 5.9% on the news.
Image source: Getty Images.
Grab comes up short
Revenue in the quarter rose 17%, or 23% in constant currency to $664 million, which missed estimates at $673.2 million. Gross merchandise volume (GMV), or the total value of all orders, grew more slowly, up 13% to $4.4 billion.
Grab's user base also continued to grow, reaching 41 million monthly transacting users, and profit margins improved as well with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) up from $64 million to $81 million.
On a generally accepted accounting principles (GAAP) basis, Grab's per-share loss narrowed from $0.03 to $0.01, which matched estimates.
CEO Anthony Tan said, "Looking ahead, we are seeing continued strength in the Southeast Asian economy and will continue to leverage our key product initiatives to serve more users in the region, while also driving cost discipline across our business."
What's next for Grab
Grab maintained its guidance for the full year, calling for revenue growth of 14%-17%, reaching $2.7 billion-$2.75 billion. However, that was below the analyst consensus at $2.77 billion.
On the bottom line, the company continues to see adjusted EBITDA of $250 million-$270 million, and positive free cash flow for the year.
Grab's growth rate was also notably slower than Uber, the global leader in ride-sharing, which reported a 19% increase in gross bookings.
While there was nothing alarming in Grab's earnings report, the weaker-than-expected growth explains why the stock fell today. The company will need to deliver faster revenue growth or improved profitability to drive a rebound in the stock.
Should you invest $1,000 in Grab right now?
Before you buy stock in Grab, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Grab wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $723,545!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of August 12, 2024
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Grab and Uber Technologies. The Motley Fool has a disclosure policy.
