15-11-2022, 06:15 PM
'We will see spectacular failures': Tech leaders reckon with the end of cheap money
https://www.cnbc.com/2022/11/15/tech-lea...eExtension
https://www.cnbc.com/2022/11/15/tech-lea...eExtension
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'We will see spectacular failures': Tech leaders reckon with the end of cheap money
15-11-2022, 06:15 PM
GRAB will be one of the spectacular failure. Burning money to grab market share is never viable. End of the day, the customers will not stay with you when you stop throwing money at them. You need real clout and comparative advantage over your competitors.
Grab's top-line growth is impressive, but it's still deeply unprofitable. Its net loss widened from $2.75 billion in 2020 to $3.56 billion in 2021, as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss widened from $780 million to $842 million.
In the first quarter of 2022, its net loss narrowed year over year from $666 million to $435 million, but its adjusted EBITDA loss widened from $111 million to $287 million. For the full year, analysts expect its adjusted EBITDA loss to widen to about $1 billion.
Grab's losses are widening because it's still offering a lot of loss-leading incentives to its partners and consumers as it expands its market share. It also plans to "look for ways" to support its drivers as they grapple with higher fuel costs this year.
That red ink is alarming because Grab's cash and equivalents declined by more than a third ($1.6 billion) sequentially to $3.2 billion in the first quarter. Grab's low debt-to-equity ratio of 0.4 gives it some room to raise fresh capital, but it could be difficult to secure attractive rates in this market.
Grab's top-line growth is impressive, but it's still deeply unprofitable. Its net loss widened from $2.75 billion in 2020 to $3.56 billion in 2021, as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss widened from $780 million to $842 million.
In the first quarter of 2022, its net loss narrowed year over year from $666 million to $435 million, but its adjusted EBITDA loss widened from $111 million to $287 million. For the full year, analysts expect its adjusted EBITDA loss to widen to about $1 billion.
Grab's losses are widening because it's still offering a lot of loss-leading incentives to its partners and consumers as it expands its market share. It also plans to "look for ways" to support its drivers as they grapple with higher fuel costs this year.
That red ink is alarming because Grab's cash and equivalents declined by more than a third ($1.6 billion) sequentially to $3.2 billion in the first quarter. Grab's low debt-to-equity ratio of 0.4 gives it some room to raise fresh capital, but it could be difficult to secure attractive rates in this market.
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