Sunday 15 October 2023

Why AK71 Rant About Grab Holdings Being a Bad Investment Makes Sense

Recently, AK71 commented on Grab Holdings to why it has a flawed business which burns cash with Temasek Holdings continuing to invest money into this loss making venture. This in addition to other comments on the poor ennvironment stance on Grab

AK Made Sense, But Unfortunately People Won't Listen

One coment of his was how Grab has been engaging in destructive competition in Singapore hurting its competitors in the taxi industry and in order to grow itself larger, burnt more cash to continue growting and then asking for more money from investors like Temasek. 

Secondly, Grab's model has resulted in the addition of more cars which defeats the purpose of being environmentally green an that is to encourage people to take the public transport such as bus and trains. Grab is doing "green washing" and is not with the true spirit of the sharing economy. 

AK's word makes sense. Since incorporation, Grab indeed has been burning cash and while efforts has been done to narrow its cash burning, the company still burns cash. In a true sense, investments in a cash burning company should always be avoided until they start to turn cash flow accretive (case in point, Sea Group and how it has turned Shopee into a cash cow). Furthermore, AK has further stressed Grab's founder Anthony is taking a salary and does not have much skin in the game of Grab's profitability with only a small stake. This is why he takes the action of being willing to burn a large amount of cash in expansion because he is behaving like an employee instead of a founder-like manner who has fortune/wealth tied to the company.

One commonality for many past successful companies which became cash cows is how the founders had much skin in the game where a large portion of their wealth is tied to the profitability of the company. I do not see this in Grab. Unfortunately, such aspects of investing is difficult and people will listen to the brand name "Grab" and the fact that Temasek has continously thrown in cash as investment with close to zero expectations of getting their money back (meanwhile Temasek hopes its 100% subsidary SP Powers continue to extract more money from Singaporeans in the distribution of electicity to housholds while announcing annual profits as dividends to go into Temasek coffers).

Grab is fast becoming a company which has little value. It definitely needs to raise prices to become a viable investment, otherwise it will be a cash burning venture which places it into the penny stock segment of the NYSE.


  1. I just use Grab pay for my coffee in Malaysia.

  2. I like to BMW (Bus, MRT, Walk) but in Malaysia I have to take Grab because I will never take Malaysia Taxi.

  3. Good points. In terms of transport stocks, my pick is the cash rich Comfort Delgro over the cash-burning Grab anytime. Grab has been able to grab market share from Comfort Delgro because rides have been 'subsidised' by the huge cash burn. With rising interest rates, the party should be stopping soon.

  4. Ak would not buy Tesla either. or even any of the US tech companies like Apple or Amazon. He doesnt understand their business and is not qualified to comment on such. We can listen to him on the local banks and local reits. he is a a guru in some areas but not all.