Grab Holdings (GRAB, Financial) just hit a speed bump. After a jaw-dropping 70% rally since September 1, Bank of America (BofA) has slapped the stock with a double downgrade—from “Buy” to “Underperform.” The price target? $4.90, signaling a potential 13% downside from its latest close. This plunged Grab's share price by 8.7% this morning. Why the sudden cool-off? BofA says Grab's blockbuster Q3 results and raised guidance are old news, and at a nosebleed valuation of 30x FY26 EV/EBITDA, the upside looks tapped out. Add in sluggish margin growth, rising competition in key markets like Singapore and Vietnam, and you've got a stock that's more “proceed with caution” than “full speed ahead.”
Here's the kicker: while Grab's profit margins improved at a brisk clip over the past two years, BofA analyst Sachin Salgaonkar warns the pace is about to hit the brakes. He forecasts a modest 50-60 basis point bump per year through FY25, compared to the 120-point leaps investors were getting used to. And the company's food delivery growth? Slowing to mid-teens percentages, leaving little room for fireworks. Meanwhile, smaller rivals are undercutting prices in Grab's mobility segment, and Salgaonkar believes those deep discounts could chip away at the market leader's edge.
But don't write Grab off just yet. Bulls like JPMorgan and Evercore ISI are still on the bandwagon, with higher price targets and calls for long-term growth. Yet, the mood has shifted. After its euphoric climb, Grab's risk-reward equation now feels lopsided. For investors, the question is clear: Is it time to take profits, or will staying the course pay off once the dust settles?
