3-in-1: GRAB + Uber + Ride-Hailing Industry Primer

“Think of Mobility & Deliveries businesses as breakeven Group CAPEX — Advertising could be where the actual profit is made, and it hasn’t even gotten started yet.”

@ValueInvesting

Sep 24, 2023

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How Grab buying over Uber will affect you—and what will happen to Uber Eats | BURO.

UBER shares have gained +75% YTD - is GRAB’s turn next?

In This Report: The comprehensive GRAB equity research primer that you’ve been waiting for — with all the necessary numbers for valuation :

Grab’s Valuation Model — All the numbers you need to derive the valuation model of this pre-profit black box.
Grab + Uber’s Business Model — What attributes drive the economics of ride-hailing and deliveries businesses? What are the “keywords” involved?
Sustainable Profitability — What is Uber’s and Grab’s path to LT profitability? What will it take for them to achieve sustainable breakeven? What’s the profit model?
Q2 Updates for Grab + Uber — How did Uber achieve its first-ever quarter of profitability in Q2? Can Grab follow suit soon? Everything you need to know to get up-to-date on Grab + Uber, starting from scratch.
Financial Statement Analysis — Understanding this ride-hailing business through the lens of its financial statements.

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Aaron Pek

January 23, 2022

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$GRAB is down -72% since its IPO… is there Value today? ($UBER +75% YTD)

Highlights:

Why 3-in-1? In the course of analyzing GRAB 0.00%↑, I found myself analyzingUBER 0.00%↑ so frequently that I ended up doing enough research on UBER as well.
- This report will focus more on GRAB as UBER has already gained +80% YTD; but readers will find sufficient insight into UBER here — as well as a comprehensive ride-hailing industry primer detailing the industry’s business model, industry developments, and how to think about the valuation framework of both companies.
- The goal of this report is to bring readers up to speed to the industry that they may independently arrive at and verify the economics of both businesses, which are famously black boxes.
UBER +75% YTD, GRAB +0% YTD: UBER had an amazing YTD performance, but GRAB’s was flat. Why?
- In this report, we will first take a look at how UBER achieved its first-ever operating profit in Q2.
- Then, we’ll see if GRAB (as an associate of UBER) can realistically copy some of those lessons in order to achieve LT profitability itself.
- What Q2 lessons at UBER are transferrable to GRAB, especially given that the former has a 14% stake in the latter?
Potential acquisition of FoodPanda by GRAB: A potential acquisition of SEA’s 3rd largest food deliveries business FoodPanda by market leader GrabFood could make it a quasi-monopoly in the region. It’s long been known that industry consolidation is what would give the survivors pricing power to pursue sustainable growth.
UBER’s potential S&P500 inclusion could uplift GRAB: UBER’s possible inclusion into the S&P500 makes it ‘hard to ignore’. Given that GRAB’s share price has barely budged YTD amidst UBER’s +80% gain and the former’s status as a 14% associate company of UBER, a fortuitous S&P inclusion of the latter could spell wonders for GRAB’s valuation.
GRAB = SEA UBER: To understand GRAB, it helps tremendously to first understand UBER. We shall be doing a deep-dive into the ridehailing & deliveries industries here:
- 1st, both businesses have pretty much the same business model.
- 2nd, UBER’s NA ride-hailing industry is a few years ahead of the emerging SEA market, so there are many lessons that GRAB could simply replicate.
- 3rd, we can observe how UBER achieved its first-ever quarter of operational profitability (Q2 OpInc) and see how GRAB might follow suit.