Grab Holdings (GRAB) saw its shares decline by 1.85% to close at $3.72 on Friday, ending a three-day winning streak. The retreat came despite the company reporting better-than-expected first-quarter results, with revenue rising 24% year-over-year to $955 million, surpassing analyst forecasts of $921.1 million. Net profit surged to $120 million from $10 million in the same period last year, reflecting significant improvement in profitability.
Key Financial Highlights
The company's on-demand gross merchandise value (GMV) also climbed 24% to $6.1 billion, driven by strong performance in its mobility and delivery segments. Adjusted EBITDA reached $154 million, up 46% from the prior year, with the margin expanding to 16.2% of revenue from 13.7%. CEO Anthony Tan called it a 'strong start to 2026,' while CFO Peter Oey reaffirmed full-year revenue guidance of $4.04 billion to $4.10 billion and adjusted EBITDA between $700 million and $720 million.
Segment Performance
Grab's delivery business generated $510 million in revenue, a 23% increase, while mobility revenue rose 19% to $337 million. Financial services posted a notable 43% gain to $107 million, supported by growth in lending through GrabFin and its digital banks. Total loans disbursed hit $1.1 billion, surging 67% compared to the prior year.
Regulatory and Cost Headwinds
Despite the strong operational metrics, investor sentiment was dampened by regulatory challenges in Indonesia, a key market. The Indonesian government plans to cap ride-hailing commissions at 8%, down from the current 20%, impacting both Grab and local rival GoTo. Additionally, rising fuel costs have pressured margins, prompting Grab to increase driver incentives. The company spent $650 million on incentives in the quarter, partly to offset higher fuel expenses and meet festive demand.
Analyst Reactions
Several Wall Street firms adjusted their price targets for Grab following the results but maintained bullish ratings. Morgan Stanley lowered its target to $5.90 from $6.40 while keeping an Overweight rating, noting that Q1 'demonstrated that growth, margins and capital returns can compound together.' J.P. Morgan's Ranjan Sharma trimmed his target to $5.80 from $5.90 but retained a Buy rating. Mizuho Securities cut its target to $6 from $7, and Bank of America Securities reduced its target to $5.20 from $6.20, both with Buy ratings.
Strategic Expansion
Grab is also pursuing geographic expansion beyond Southeast Asia. The company announced plans to acquire Delivery Hero's Foodpanda business in Taiwan, marking its first foray outside its core markets. The deal, pending regulatory approval, is expected to close in the second half of 2026.
Outlook
While Grab's first-quarter results demonstrated solid growth and improving profitability, the stock's decline on Friday suggests that investors remain cautious about the regulatory and cost pressures ahead. The company's ability to balance growth initiatives with cost control and regulatory compliance will be crucial in the coming quarters. With a mix of strong fundamentals and external challenges, Grab faces a critical test as it navigates the evolving landscape in Southeast Asia.
