- Ride-hailing company Grab (NASDAQ:GRAB) reported earnings today
- These earnings showed a narrowing loss, as well as outperformance for the company’s delivery segment
- Investors appear to be bottom fishing, picking stocks such as GRAB that have been badly beaten up by the overall market
One of the best movers in today’s rather choppy market is Grab (NASDAQ:GRAB) after it reported earnings. As of today’s morning session, shares of GRAB stock accelerated more than 30%, before cooling to gains of 22% at the time of writing.
This move coincides with Q1 earnings results that the market is cheering today. The company reported a surge in monthly users, as well as impressive top-line numbers.
For this past quarter, Grab reported revenue of $228 million. While this number represented only 6% growth on a year-over-year (YOY) basis, other operating segments really outperformed. Among these was the company’s delivery business, which saw revenue accelerate 70% over the past quarter. Declines in the company’s mobility business, as well as stable results from financial services, rounded out these results.
Perhaps more importantly, Grab reported a loss of $435 million. While this is a significant sum, this loss is 35% smaller than during the same quarter they year prior.
Let’s dive into why investors are viewing these results so positively today.
Strong Earnings Drive GRAB Stock Higher Today
Significant investor concern heading into earnings appears to have been priced into GRAB stock over the past week. This stock trended downward, as negative earnings surprises from other major companies impacted most stocks trading on the Nasdaq. Further, zooming out, GRAB stock is still down more than 70% from its initial public offering (IPO) price, signaling investor confidence in ride hailing has been hit hard.
That said, the strong performance Grab saw in its delivery business, which drove approximately 40% of the company’s revenue, is notable. With Asian economies reopening, there’s a strong bullish long-term thesis starting to build for Grab.
Today, it appears the market is pricing in Grab’s growing share in deliveries as a key driver of growth over the long-term. That said, this is still a company that’s burning cash, a factor not viewed positively by the markets right now. Accordingly, investors will want to keep a close eye on how fast Grab can narrow its loss, and potentially turn positive. Should positive earnings be in the cards by next year, this is a stock that may look attractive at these levels. At least, that’s what the market is betting on today.
On the date of publication, Chris MacDonald 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 InvestorPlace.com Publishing Guidelines.