$GRAB

Explicit claim • strong conviction • basis: explicit term

In Southeast Asia, they're becoming one single company, but you can get the stock for just $3.93 per share and a $16 billion market value. So, what exactly is Grab, and why do I think this becomes one of the world's next great technology platforms? Uh the easiest way to think about this is imagine if Uber, DoorDash, Cash App, PayPal, and Google Ads all had a baby.

Explicit claim • strong conviction • basis: fair value gap

Grab is now trading at a forward price to earnings of 21.8. This is the cheapest this stock has traded for ever. You haven't been able to buy the stock at a cheaper valuation when measuring on a forward price to earnings basis. So today I updated my discounted cash flow valuation for Grab Holdings with a few notable adjustments. First of all, I revised lower my expectations for free cash flow for this business over the next few years. Higher costs and lower revenue resulted in lower estimates for free cash flow going forward. Further, I also adjusted upwards the risk of the business because of the increasing volatility in the share price. Combined, that had the impact of lowering the intrinsic value per share. Still, I calculated a fair value estimate of $6.18 for the business. That's more than double the current market price of $3.03.

Implied claim • strong conviction • basis: explicit term

If you look at growth adjusted metrics, Grab trades at a PEG-like ratio of roughly 1.2. I mean, they have a trailing 12-month revenue growth rate north of 21% with a 16% net margin. Which is fantastic for consumer tech. Yeah, right. A 1.2 multiple on those margins usually means a stock is primed for a huge upward re-rating.

Implied claim • moderate conviction • basis: quality at discount

Buying Grab at current prices could be a good deal if based on its fundamental value and long-term potential, not just the low share price.