Grab’s Valuation Is Still Far Too Rich

$Grab Holdings(GRAB.US)$ is a delivery, e-commerce, and fintech company that’s focused on various Southeast Asian markets. The company came public via a special purpose acquisition company $SPACs(BK2541.US)$ . Specifically, it merged with a SPAC named Altimeter Growth Corp recently and changed its ticker symbol to $Grab Holdings(GRAB.US)$.

Investors might be tempted by the fact that Grab’s share price is just above $6 and think that it is starting to become a bargain. But don’t let the low price per share fool you; it is still an exceedingly expensive stock.

$Grab Holdings(GRAB.US)$ has a market capitalization of $22.8 billion, thanks to its huge outstanding share count. That’s a gigantic number for a company with less than $1 billion of annual revenues. Meanwhile its revenues actually sank in Q3 versus the same period a year earlier. Even if its business was profitable, and it isn’t, the stock’s sales multiple is awfully steep.

Moreover, the incentives that it gives to its drivers and customers together are roughly equal to all of its revenue. Without the incentives, much of its business would probably disappear. Long story short, investors are paying a massive price for a small business with dreadful profitability metrics.