Grab a Piece of Singapore’s Ride-Hailing Market with Altimeter Growth

Chinese ride-hailing giant DiDi Global (NYSE:DIDI) is well-known among financial traders in 2021, but that company has regulatory problems. For a similar investment with fewer issues to worry about, you might consider Altimeter Growth (NASDAQ:AGC) as AGC stock could be a hidden gem on Wall Street.

A man holding two puzzle pieces surrounded by more, smaller puzzle pieces. SPAC IPOs
Source: Pasuwan/

Actually, Altimeter Growth is nothing but a shell company. The main focus today will be on Singapore ride-hailing service Grab, which Altimeter will help to go public through a special purpose acquisition company (SPAC) merger.

That transaction hasn’t been finalized yet. So, don’t go looking for the “GRAB” ticker symbol yet, as it’s still AGC stock for the time being.

And don’t misunderstand – I’m not against investing in DiDi or any other Chinese company. However, Grab is a lesser-known business with excellent potential, and it really deserves more attention.

A Closer Look at AGC Stock

Prior to the April 13 announcement of the intent to merge with Grab, AGC stock was highly volatile as it bounced between $11 and $15.

The share price was close to $15 on the day of that announcement, so it was near the top of its range.

Oftentimes, SPAC stocks will rally after a merger target is revealed. Yet, this didn’t happen with AGC stock.

In fact, the opposite happened as the stock immediately fell from $15. By mid-October, the share price had declined to $10 for a 33% loss.

News that the merger had been delayed in June seems to have caused AGC stock to lose value through the summer and afterwards.

Apparently, the merger’s delay was due to a probe from the Securities and Exchange Commission (SEC) regarding a financial audit of Grab’s previous three years.

However, there’s good news as the stock appeared to be making a comeback in early November.

Indeed, by Nov. 5, the AGC stock price had already climbed to around $12.

Paving the Digital Path

While DiDi addresses the vast Chinese market, investors shouldn’t dismiss the market in which Grab conducts its business.

As Altimeter founder and CEO Brad Gerstner emphasized, Grab’s addressable market goes beyond Singapore.

“As one of the world’s largest and fastest-growing internet companies, Grab is paving the digital path forward for the 670 million citizens of Southeast Asia,” Gerstner clarified.

China’s population is bigger than that – I won’t deny it.

On the other hand, Southeast Asia’s digital economy has powerful growth potential.

The region’s population is roughly twice the size of the U.S. However, Southeast Asia’s penetration rate for food delivery, on-demand mobility and electronic transactions is merely a fraction of the U.S. and China.

Moreover, Grab expects its total addressable market to expand from around $52 billion in 2020, to more than $180 billion by 2025.

So, paving the digital path in Southeast Asia sounds like a very lucrative proposition.

More Than Just Ride Hailing

While DiDi has struggled under the strict Chinese regulatory regime, Grab has thrived in Southeast Asia.

Grab offers not only ride-hailing services through its app, but financial services and online food delivery as well.

Anthony Tan, Grab’s co-founder, calls this the “superapp business model.”

And in Grab’s most recently reported financial results, which covered 2021’s second quarter, it’s evident that this business model is working quite well.

During that quarter, Grab’s revenues grew to $180 million, up 132% year-over-year.

Furthermore, the company’s gross merchandise value reached an all-time high of $3.9 billion, marking a 62% year-over-year increase.

On top of all that, Grab’s adjusted net sales increased 92% year-over-year, hitting a new quarterly record of $550 million.

The Bottom Line

It’s fine if you want to invest in DiDi. However, there’s another business that doesn’t appear to have the same degree of regulatory concerns.

Grab operates in a region with a large addressable market that’s expected to expand in the coming years.

Plus, the company offers multiple services, and is thriving financially.

So, don’t sleep on the opportunity with AGC stock. As the digital economy in Southeast Asia grows, so should Grab’s revenues.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Article printed from InvestorPlace Media,

©2022 InvestorPlace Media, LLC