Grab Loses a Fifth of Share Value on Day One as Public Company

Grab has seen its shares lose over a fifth of their value on its first day in trading in New York, per a Wall Street Journal (WSJ) report Thursday (Dec. 2).

The ride-hailing and delivery company has been set back shortly after its merger with a special purpose acquisition company (SPAC).

The WSJ notes that the company had agreed earlier this year to combine with the SPAC Altimeter Growth Corp. in a deal to give them a $40 billion valuation — which set a high bar for transactions with SPACs.

As of Dec. 2, Grab’s shares fell 21% and hit $8.75, with its market capitalization sitting around $34.6 billion. The company’s shares initially opened at $13.06 on Thursday — a 19% increase from Wednesday — but things quickly went south.

The deal came along with a $4.5 billion fundraising for Grab, but the company, which is nine years old, hasn’t turned a profit. Instead, the company saw revenues fall 9% and hit $157 million in Q3.

The COVID-19 pandemic had a new surge in Southeast Asia, and lockdowns in Vietnam caused pressure on Grab, although food delivery volumes picked up.

SPAC mergers had a moment in the spotlight early in the year, with many investors excited. However, things tempered out later in the year, with regulators passing down numerous measures to rule on the proceedings, including over the transactions’ accounting methods and companies’ growth projections.

Grab isn’t the only company to struggle with a debut — Paytm also faced trouble last month as it tried to go public, with what investors and analysts said was an “aggressive” IPO valuation. Paytm, they said, had no clear path to profitability and too many rivals.

PYMNTS writes that Grab made its debut on Dec. 2, which came with shares trading at $10.15, after the aforementioned reports of opening at around $13 a share.

See also: Grab Goes Public as Super-App Competition in SE Asia Heats Up

The report makes note that Grab faces challenges from other super apps, including the merger of Gojek and Tokopedia, which will try to go public in the U.S.