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

Grab, the Singapore-based ride-hailing giant swiftly growing its footprint as a super app, is making its U.S. debut on the Nasdaq exchange today (Dec. 2).

Shares tumbled about 20% on the day, to end at $8.75.

And now, we might say, the hard part begins.

One day’s trading does not a trend make, and volatility is to be expected in any name, no matter the vertical.

The company raised $4.5 billion through its special purpose acquisition company (SPAC) merger with Altimeter Growth Corp., giving Grab an implied $40 billion valuation.

We don’t have much in the way of analysts’ notes yet to get a sense of how Wall Street sell-side firms may be thinking about Grab’s financials and prospects in the months and the years ahead.

At that $40 billion valuation noted above, the company trades at about 26x adjusted net sales detailed in the company’s prospectus filed with the Securities and Exchange Commission. Of course, we would expect that metric to shift — as the denominator will change, markedly, once we get a full set of 2021’s results. It’s fair to say that growth rates will continue to be significant, on a normalized basis.

The market size and demographics, as we wrote about here, leading into the IPO, are attractive. As detailed in the filing, Southeast Asia is among the fastest growing economies in the world, growing more quickly than China and the United States, and is poised to become the world’s sixth largest economy as measured by GDP 2030. At the same time, disposable income is slated to grow by 8.2%, compounded annually, through 2025.

With those broader economic themes in play, we’re seeing a battle of super apps take shape in the region. Most notably, perhaps, Grab is being challenged, directly, through the merger of Gojek and Tokopedia. That merged firm, GoTo, is also looking to go public here in the states. Grab and GoTo will joust for consumers’ share of wallet and payments (Grab has a digital banking license in place; Gojek has integrated with Indonesia-based Bank Jago).

In the bid for super-app status, for a cemented continuum that keeps consumers in place once they’ve crossed the threshold of a digital “front door” it should be noted that Tokopedia stands as one of the largest eCommerce marketplaces in Indonesia, where, as evidenced in the first quarter of this year, monthly visits (reported by Statista) totaled 135 million, compared to about 70 million in the prior year. More recently, as reported by CNBC, Tokopedia’s installed base represented 11 million merchants and 100 million active users. When GoTo goes public, investors here will be able to make a bet on the competition in the region, and where Sea (already publicly traded, and pushing into delivery) helps crowd the space even more.

As lines blur, as each of these firms map out their strategies, get ready for volatility on the Street.