Investors should watch inflation and regulatory impact amid Grab’s cost cuts

THE market appeared to take comfort last week in the cost-cutting undertaken by on-demand transport and delivery provider Grab, but has since turned bearish. Investors could be pricing in some coming headwinds: the impact of inflation and the potential costs from new regulations for gig workers in Singapore and beyond.

Grab announced on Nov 16 that it had narrowed its net loss for Q3 to US$327 million, from US$970 million in the year-ago period. (The year-ago figure had included US$443 million in interest expenses on convertible redeemable preference shares, which ceased upon listing.)

The news sent Grab shares up 2.6 per cent, closing at US$3.21 on Nov 20. Maybank raised its “sell” call to a “hold”, with a US$3.40 target. But some wariness seems to have returned, which sent the stock down 7.5 per cent to US$2.97 on Monday (Nov 21).