<div id="readability-page-1"><div><div>Grab Holdings has continued its steady march toward profitability, as evidenced by a profitable third quarter of 2025 and raised full-year guidance. The stock, however, has been under pressure. After hitting its 52-week high in early October, the stock has been dropping, creating a potential buying opportunity. I haven't written about Grab for a while, but last time, I noted the company's progress in balancing growth with improving margins. Since then, the company's results have reinforced this trajectory. In this article, I will update my investment thesis on Grab. I will review Grab's business model and competitive advantage, dissect the fundamentals, evaluate Grab's valuation versus peers and finally offer my take on the stock's outlook.Company OverviewGrab operates across ride-hailing, deliveries, and financial services, making it one of Southeast Asia's most complete digital platforms. It's active in over 800 cities across eight countries, including Singapore, Indonesia, and Malaysia. Users can book transport, order food or groceries, send parcels, pay bills, and access lending or insurance, all inside one app. It's also expanded into offline retail in Malaysia and secured banking licenses (through GXS Bank in Singapore and GXBank in Malaysia). This breadth of services under one roof is aimed at increasing user engagement and loyalty.In my view, Grab's primary competitive advantage lies in its extensive two-sided network and the synergies of its super-app ecosystem. The company's massive user base (47.7 million monthly transacting users as of Q3 2025) and its large network of drivers and merchant-partners create powerful network effects. The more users and services on the platform, the more valuable it becomes. For example, the same drivers can fulfill both ride and delivery requests, and the same app accounts can be used for payments and banking, driving operational synergies. Cross-service adoption materially lifts user value. Multi-service users spend 4 more and transact twice as often as single-service users. This flywheel effect means that as Grab adds services (like GrabFood, GrabMart groceries, GrabPay, etc.), it deepens customer engagement and raises switching costs. Grab's fintech offerings illustrate this well. The company disclosed that 90% of new bank customers for its GXBank in Malaysia were acquired at essentially zero cost through the Grab app's existing user base. That's what a real ecosystem looks like. When users are already transacting across multiple verticals, it's hard for a single-category competitor to lure them away.The sheer volume of transactions across the ecosystem generates unique data markers. This information is utilized for underwriting credit risk, enabling the Financial Services segment to accurately assess risk for the unbanked and underbanked population that traditional banks cannot serve. Approximately one-third of customers accessing Grab's credit products were previously unable to obtain credit due to a lack of a credit bureau record. Effectively reduces customer acquisition costs while expanding the total addressable market (TAM).And that cross-service integration deepens engagement, making the platform harder to leave. I'm starting to see the payoff. Grab's regional penetration has climbed from just above 4% in 2021 to 6.81% today. It's already profitable at that level. For context, Uber reports a U.S. penetration of 15%. Grab's still a long way from that, but the core economics are working earlier, which says something about the strength of the model.Source: AuthorNonetheless, competition is still fierce, especially in Indonesia, where GoTo (GOTO) competes with Grab in ride-hailing and delivery. An M&amp;A between the two has been discussed for a while, and recent reports say the Indonesian government is backing the idea. If it goes ahead, the combined entity could control over 90% of the market.That said, Grab's first super-app mover status in many markets and its hefty war chest (still over $5 billion in net cash, as discussed later) provide resilience. Moreover, Grab also raised $1.5 billion in convertible notes, citing acquisitions among the intended uses of the capital.If Grab were to acquire GoTo, the revenue contribution would depend on overlap and execution. GoTo generates roughly $800 million annually, but due to shared market exposure, only part of that would likely be incremental. After accounting for user and service redundancy, the net uplift could fall in the $400600 million range. Grab's Deliveries and Mobility units brought in $2.9 billion over the last 12 months, so absorbing even half of GoTo's topline would be meaningful. Beyond the initial bump, Grab's monetisation model offers further upside. GoTo has 61.1 million annual transacting users. If Grab converted 10% of them (6.1 million) into GrabUnlimited subscribers at an average ARPU of $1.502.00/month (broadly in line with current pricing across Southeast Asia), that alone could yield $110145 million in recurring revenue. In addition, Grab's merchant-facing products, such as GrabAds and GrabFin, have seen rising adoption. Assuming Grab can onboard 40,000 GoTo SMEs and monetise each at $500/year through ads, lending, or logistics, that would add another $20 million annually. These levers combined could drive $530765 million in incremental revenue, pushing Grab's consolidated revenue above $4 billion, with further upside as cross-sell and engagement deepen.Grab's is also making investments in autonomous and remote driving. Grab announced a strategic investment in U.S.-based May Mobility to help integrate AV fleet management, routing, and matching systems into its platform in Southeast Asia. Grab also followed up with a stake in German remote-driving firm Vay, aiming to co-develop use cases suited to Southeast Asia's fragmented roads and regulatory patchwork. Both moves tie into its plan to launch an autonomous ride service in Singapore by early 2026. A full AV rollout across the region is still a long way off. But Grab wants a seat at the table if the economics flip. Over time, if successful, these AV and remote-driving pilots could enhance service reliability, cut variable driver costs, and improve long-term mobility margins. But near term, the investments will be unlikely to shift unit economics materially before 2027.There's also a bigger-picture angle that could quietly work in Grab's favour. Several global strategy desks are increasingly leaning toward an overweight in emerging markets for 2026. As global trade remains fragmented and tariffs become a more persistent feature of the landscape, capital could start to lean toward platforms tied to local consumption and services. In that context, the digital commerce complex has resurfaced as a favored expression of the theme, with companies such as MercadoLibre , Coupang , and Sea frequently cited as scalable. Grab fits this theme well. It has evolved far beyond ride-hailing. It now moves food, groceries, money, and merchant services, covering nearly every major vertical in Southeast Asia's digital economy. FinancialsGrab's Q3 2025 results show a business growing fast while staying profitable. Revenue hit $873 million for the quarter, up 22% year-over-year (YoY). This marked an acceleration from the previous quarter, driven by robust performance in both the Deliveries and the Financial Services segments. Perhaps most notably, Grab achieved a GAAP operating profit of $27 million in the quarter, swinging from a $38 million operating loss a year ago. Net profit was $17 million, marking the fifth consecutive profitable quarter. While these net profits are modest in absolute terms, they reflect a drastic improvement from the deep losses Grab was incurring just a couple of years ago.<figure></figure>Source: GurufocusGrab's core businesses (deliveries and mobility) kept growing in Q3. Deliveries (which includes food delivery, GrabMart groceries, etc.) brought in $465 million, up 22% YoY. Deliveries Gross Merchandise Value (GMV) grew even faster, rising 26% YoY to $3.73 billion, driven by more transactions, more users, and higher spend per user. The segment's profitability improved. Deliveries achieved segment Adjusted EBITDA of $78 million, up 42% YoY, which is 2.1% of GMV, from 1.8% a year ago. Management attributed this margin expansion to better operating leverage and growing contributions from the higher-margin advertising business (GrabAds) on the platform. In fact, GrabAds has quietly become a meaningful revenue stream. It now contributes over 1.7% of GMV and retains 75% of merchants using the platform. In Q3, active advertisers on Grab's self-serve ad tool rose 15% YoY, and their average spend jumped 41%, reflecting how Grab is monetizing its ecosystem beyond just rides and food.Mobility (ride-hailing and transport) also kept growing. Revenue hit $317 million in Q3, up 17% YoY, while GMV grew 20% to $2.04 billion. That gap reflects falling average fares, down about 7%, even as the number of trips climbs. This drop is part of Grab's affordability strategy, which is both bringing in new customers and, with cross-sell, allows Grab to deepen the value for each of those customers. Mobility's segment Adjusted EBITDA was $181 million (an 8.9% margin on GMV, roughly flat vs 8.8% last year). The margin stability, even with fare reductions, suggests Grab is leveraging its scale to keep unit economics intact through cost controls and possibly reduced incentives in mobility. Overall, Mobility remains Grab's cash cow with significantly higher margins than deliveries.Grab's promising Financial Services segment is smaller in revenue but growing rapidly and consuming investment. Q3 Financial Services revenue was $90 million, up 39% YoY. This includes GrabFin (payments, lending, insurance) and the digibank operations. The growth was driven primarily by lending activities. Grab's total loans disbursed in Q3 grew 56% YoY to $886 million, reaching an annualized basis of $3.5 billion. Its loan receivables portfolio reached $821 million outstanding, up 65% from a year ago. The flip side is that provisions for expected credit losses also rose in line with the loan growth, resulting in the Financial Services segment's Adjusted EBITDA loss widening slightly to $28 million. Management explicitly stated that 90-day non-performing loans are within risk appetite and that the loan portfolio generates &#34;healthy risk-adjusted returns&#34; above the cost of capital. Still, it's clear this segment is in investment mode. Financial Services are strategically important to Grab's ecosystem in the long term (by engaging users through payments and loans), but investors should expect continued moderate losses here as Grab scales the business. The segment currently contributes around 10% of group sales, and Grab appears willing to bear some short-term pain (credit costs, startup expenses) to grow this arm.Grab is not only growing the top line but also engagement. Monthly Transacting Users reached 47.7 million in Q3, up 14%. Average spend per user was $133 this quarter. So, Grab isn't just adding users. Each one is using the platform a bit more. Incentives, like discounts and promos, remain a key lever here. Total incentives reached $585 million in Q3, up 26% YoY. This was a substantial 17% increase for consumer incentives and a 40% increase for driver/merchant partner incentives compared to the prior year. Partner incentives tend to stick. Once a driver or merchant is onboarded, churn is much lower. However, the real test is on the consumer side, where churn is higher, and retention takes more effort. That said, this quarter showed early signs of leverage. Consumer incentives fell by 30 basis points as a share of GMV, even as engagement and GMV continued to rise. In other words, Grab is onboarding more users, expanding across services, and holding incentive intensity flat. That's what you want to see from a platform starting to scale beyond fixed cost absorption.<figure></figure>Source: Grab Q3 2025For instance, promotions for GrabCar Saver or GrabBike rides can attract cost-conscious users, and incentives for GrabMart can drive trial of grocery delivery. While incentives remain a large expense line, Grab's ability to keep them around 10% of GMV is a positive sign of discipline. Free cash flow (FCF) turned negative this quarter, driven primarily by strategic working capital dynamics related to the rapidly scaling FinTech segment. Deposits from customers in the banking segment fell by $220 million. The company said it was a calculated step, as management proactively adjusted deposit rates to manage funding costs in line with market rates. This withdrawal of deposits created a temporary cash outflow. At the same time, Grab grew its loan book by another $151 million, further impacting working capital. These items are typical in a scaling banking business and are excluded from Grab's adjusted free cash flow metric, which came in positive at $283 million for the quarter. While the company did add some debt to the balance sheet, it still remains strong. Grab ended Q3 with $6.9 billion in gross cash liquidity and $2.1 billion in debt. This equates to a net cash position of $4.8 billion, or $1.14 per share in cash.ValuationGrab's valuation remains one of the most compelling aspects of my investment thesis, with the stock trading at levels that suggest significant upside potential relative to its financial trajectory.At current prices below $5.15 per share, Grab holds $1.14 per share in net cash, providing a margin of safety. This effectively means that a large portion of the business is being valued at a fraction of its potential. Excluding net cash, the market is valuing Grab's operating business at just $4.01 per share, below what I believe it's worth.<figure></figure>Source: GurufocusGrab currently trades at a forward P/S of 5.42x, roughly in line with its historical average. On an EV/Sales basis, that figure drops to around 4.1x.Source: AuthorIt is difficult to compare Grab to its peers, given each company's segment mix. For example, Grab currently trades at a premium to Uber , which carries an LTM EV/Revenue multiple of 3.6x. This premium is fundamentally justified by Grab's significantly higher growth rate and the substantial runway available in the underpenetrated SEA market. That low-penetration profitability is key. Southeast Asia has nearly double the population of the U.S., and Grab is already turning a profit at single-digit adoption. If it gets anywhere near Uber's 15% U.S. penetration (let alone surpasses it) the revenue and earnings trajectory changes meaningfully. The TAM is there. The unit economics are proving out. Hence, the market is assigning a higher probability to Grab successfully maintaining its growth while reaching its targeted segment margins (Mobility 9%+, Deliveries 4%+). That may justify a higher multiple over time, especially as free cash flow scales.From a discounted cash flow analysis, incorporating projected cash flow growth and using a WACC of 9.04%, I estimate a fair value of $6.54 per share, suggesting a potential upside of approximately 27% from current levels. This valuation is supported by Grab's improving operating leverage, continued expansion of financial services, and higher monetization of its ecosystem. If Grab continues executing on its profitability roadmap, I expect the stock price to reflect this progress, unlocking further upside.<figure></figure>Source: AuthorAs I mentioned earlier, emerging markets are a key theme for 2026, and smart money appears to be positioning accordingly. While a few gurus have exited, investors such as Ray Dalio (Trades, Portfolio) and Howard Marks (Trades, Portfolio) have increased exposure, with each now holding over 12 million shares. Baillie Gifford (Trades, Portfolio), one of the largest shareholders, trimmed its stake by just 1% last quarter, which is practically nothingRisksNo investment comes without risks. One main concern involves margin erosion and competitive intensity. While Grab achieved margin stability this quarter, any aggressive competitive maneuvering by rivals could force a renewed incentive war, directly pressuring the Deliveries segment's ability to reach its 4%+ margin target or the mobility segment to reach its 9%+. Moreover, the accelerating growth of the lower-margin GrabMart segment, while strategically important for user stickiness, structurally dilutes overall delivery margins in the short term, complicating the margin path over the next 18 months.Grab's loan book is growing fast, and with that comes credit risk. While management is confident in its proprietary, data-driven underwriting models, they haven't been tested through a real macro shock in Southeast Asia. If one hits, actual credit losses could outpace provisions, impacting both profitability and capital.Finally, the company is also investing in autonomous and remote driving. The long-term goal is to cut driver costs and boost mobility margins. But AV depends on real infrastructure, and most Southeast Asian cities aren't there yet. In places like Indonesia, Vietnam, and Thailand, roads are inconsistent, traffic patterns are informal, and regulations lag. Grab is starting in Singapore, where infrastructure and regulation are world-class. Scaling AV beyond Singapore will require regulatory coordination and real infrastructure upgrades before it becomes economically viable.My Final TakeGrab's latest results reinforce my core thesis. This is a business scaling profitably, with growing cross-user engagement, monetisation from financial services and advertising, and declining acquisition costs. The ecosystem is deepening, and the model is starting to show real operating leverage.it's showing up in the numbers. Revenue is rising, and segment-level EBITDA is growing faster than the top line. That's early-stage leverage at work. Each new user or transaction adds more profit than the last. This is what you expect once a platform moves beyond its fixed cost base.That said, incentives remain something I'm watching closely. Management is using them to reactivate users, but the real test is retention once subsidies are pulled back. What I want to see, and in fact what we're starting to see, is consumer incentives coming down while GMV growth holds. That's how sustainable unit economics start to take shape.With a solid balance sheet and growing high-margin revenue streams, I continue to see Grab as a compelling long-term opportunity in Southeast Asia's digital economy.</div></div></div>

GRAB

Grab Holdings has shown progress towards profitability with a profitable Q3 2025 and raised full-year guidance. Despite this, its stock has been declining, presenting a potential buying opportunity. Grab's super-app ecosystem, with services across ride-hailing, deliveries, and financial services, enhances user engagement and loyalty. The company faces competition, particularly from GoTo in Indonesia, but its strong market position and financial resources provide resilience. A potential acquisition of GoTo could significantly boost Grab's revenue and user base.

Grab's Super-App Is Working, But the Market Isn't Fully Pricing It In