During the September 29 episode, toward the end of the lightning round, a caller asked about Grab Holdings Limited (NASDAQ:GRAB), and Jim Cramer commented:
Man, I don’t know what’s going to turn that thing around… Stocks do stop at zero. That’s one of the best things I know about common stocks.
This isn’t the first time Cramer has dismissed the stock. See his earlier warning here.
Record Revenue Growth And Expanding Profitability
Grab Holdings Limited reported record second-quarter results, with revenue increasing 22% year-over-year to $997 million. On-Demand gross merchandise volume rose 21% to $6.5 billion, while monthly transacting users increased 17% to 53.9 million. Adjusted EBITDA climbed 54% year-over-year to $168 million, with the adjusted EBITDA margin expanding to 16.9% from 13.3% a year earlier. Operating profit also increased to $19 million from $7 million.
Management raised its full-year 2026 guidance, now expecting revenue between $4.1 billion and $4.15 billion and adjusted EBITDA between $720 million and $740 million. The company also authorized another $750 million share repurchase program, bringing cumulative repurchase authorization since 2024 to $1.75 billion. As of June 30, the company reported $7.4 billion of gross cash liquidity and $5.4 billion of net cash liquidity.
It has continued expanding beyond its core mobility and delivery operations. Financial Services revenue increased 59% year-over-year to $134 million in the second quarter, while its gross loan portfolio reached $2.3 billion, up 197% from a year earlier. Grab Holdings Limited also completed the consolidation of Superbank in June and completed its acquisition of Stash in July.
Incentive Spending And Financial Services Risks
Grab Holdings Limited continues to face significant spending requirements across its platform. Total incentives reached $706 million in the second quarter, with On-Demand incentives increasing to 10.9% of On-Demand GMV, up 72 basis points year-over-year. The company said the higher spending was driven partly by efforts to support driver-partner earnings amid increased fuel costs and to encourage adoption of lower-cost services.
Profitability also remains uneven across the company’s businesses. Financial Services generated $134 million of revenue in the quarter but posted negative adjusted EBITDA of $15 million. The segment’s rapidly expanding lending operations also increase the scale of the company’s exposure to credit performance. Grab’s latest filing identifies its ability to reduce losses, manage incentives, compete effectively and achieve sustainable profitability among its principal business risks.
The company is also committing significant capital to financial services expansion. On September 15, Grab Holdings Limited agreed to acquire a 60% controlling stake in Atome Financial for $1.49 billion in cash, with the transaction expected to close by the third quarter of 2027 subject to regulatory approvals and other conditions. The company has also agreed to acquire the remaining 40% approximately two years after completion of the first transaction, subject to additional conditions. It has raised its 2028 targets to $1.7 billion in adjusted EBITDA and more than 30% annual revenue growth from 2025 to 2028, but the proposed transaction adds another major execution and regulatory undertaking.
Regulatory exposure remains another challenge. Grab Holdings Limited operates across multiple Southeast Asian jurisdictions, where rules covering digital platforms, payments, competition, delivery services and other activities continue to evolve. Its annual report specifically highlights regulatory compliance, competition, capital requirements and profitability as material risks to its operations and prospects.
Hedge Fund Activity And Short Exposure
According to Insider Monkey’s database tracking over 1,000 elite hedge funds, 48 hedge funds held positions in Grab Holdings Limited at the close of the second quarter, compared with 50 in the prior quarter. Of those, Point State Capital remained the top hedge fund holder in Q2, increasing its holdings by 101% to 84.9 million shares. Additionally, Ken Griffin’s Citadel Investment Group increased its stake by nearly 600% to 29.6 million shares. Short interest stood at 6.19% of the public float as of mid-September.
Grab Holdings Limited has continued to produce double-digit revenue and GMV growth while expanding adjusted EBITDA and its user base. At the same time, elevated incentive spending, the rapid expansion of its lending portfolio, continued regulatory exposure, and the planned $1.49 billion Atome Financial acquisition remain important factors as the company works to sustain its improving financial performance.
READ NEXT: Jim Cramer Is Holding Back on Snap (SNAP) Until It Shows a Profit and Jim Cramer on BlackBerry (BB): “I Am Surprised That It Came Back Down”.
