---
endpoint: analytics
pattern: Technology
status: done
latency_ms: 152367
conversation_id: c746adcc-e847-4e9c-ac10-276e2b96f7f4
citations: 2
created: 2026-05-31 19:01:25Z
---

# What’s the bull case bear case for Grab?

# Grab Holdings (GRAB US) — Bull Case / Bear Case

Synthesizing **CLSA internal research** (Apr–Jun 2025; rating **O-PF**, TP **US$5.25**) and **public earnings transcripts** (Q2 2025 and FY2025/Q4).

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## Bull Case

**1. Profitability inflection is real and recurring.**
- Grab has now delivered its **14th consecutive quarter of adjusted EBITDA growth**, with trailing-12-month adjusted free cash flow expanding to **US$229m** in Q2 2025 [11]. On-Demand GMV accelerated to **+21% YoY** in USD (+18% constant currency) [11].
- CLSA forecasts a **3-yr 40% Cagr in adjusted EBITDA**, with absolute EBITDA reaching **US$463–885m in 2025–27** vs. US$313m in 2024 [10].
- Management has set a **US$1.5bn adjusted EBITDA target by 2028** — roughly **3x the 2025 base** and more than 2x the 2026 guide [12].

**2. Mobility is a quasi-monopoly with industry-leading margins.**
- Mobility GMV grew **+17% YoY** in 1Q25 with **8.8% segment adj. EBITDA margin** [7]. CLSA sees "minimal risk" to Grab's **industry-leading ~9% Mobility adj. EBITDA margin** [10]. The recent **street-hail operator license in Singapore** adds a fresh GMV vector [7].

**3. Deliveries TAM expansion via affordability + high-margin ads.**
- Affordability products (Shared Saver, GrabMart) are widening the addressable market and driving MTU growth; CLSA flags upside risk to its **10% 3-yr Deliveries GMV cagr** [9].
- **GrabAds operates at ~60% adj. EBITDA margin** with revenue tracking >2% of Deliveries GMV in 2025 (vs 1.6–1.8% in 3Q–4Q24) — a structural offset to affordability-driven margin pressure [6].
- **Delivery Hero's exit from Thailand** is a tailwind for the incumbent [10].

**4. GoTo M&A optionality — the asymmetric upside.**
- Indonesia is Grab's **largest GMV contributor but lowest margin** today; a merger with GoTo could give the combined entity **>80% market share** [2].
- CLSA's sensitivity analysis shows the merger would be **+33% to +56% accretive to adj. EBITDA per share, base case +46%** [2].
- Drivers: (i) GoTo's Mobility margin re-rating toward Grab's level, (ii) Indonesia Mobility/Delivery margins lifting +1–2ppts, (iii) lower corporate costs [1].

**5. Fortress balance sheet.**
- Grab has **robust FCF generation and the highest net cash / market cap ratio** in its peer group, providing optionality for M&A and buybacks [8]. CLSA lifted its SOTP TP from **US$4.20 → US$5.25** in April 2025 on a 10–30% NP estimate upgrade [10].

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## Bear Case

**1. Deliveries margin runway is shorter than the bulls assume.**
- Management has **scaled back the 2026 Deliveries 4% adj. EBITDA margin target** — CLSA's base case is now only **2.8% in 2026** [4]. Even 2025–27 deliveries adj. EBITDA margins are modeled at just **2.3–3.2%** [6].
- Affordability initiatives are explicitly a **growth-for-margin trade-off**: Grab's own strategy "will come at the expense of margin expansion" [9].

**2. Mobility margins are capped.**
- Grab is reinvesting Mobility profits into **driver supply and footprint expansion**, which could **limit margin expansion beyond the current 8.8%** [7]. Mobility EBITDA growth becomes more GMV-dependent and less margin-led.

**3. GoTo deal optionality is fading near-term.**
- Grab has **publicly said it is NOT in talks** over a GoTo acquisition. Without corporate action, **consensus upside is limited in the near term** — CLSA flagged this as a downside catalyst in its June 2025 trading update.
- The reported **US$7bn deal price (Bloomberg) is expensive and lacks product synergies** even if it eventually closes [3].

**4. Competition + regulatory overhang.**
- CLSA's stated investment risks: **(i) new entrants** could erode share and force Grab to keep incentive spend elevated, **(ii) regulatory risk** around gig-worker classification and digital finance, **(iii) macro/global slowdown**, **(iv) tighter rates** compressing valuation multiples [5].

**5. Valuation already prices the optionality.**
- TP US$5.25 implies only **+3% potential** vs. spot at the time of the 20 May 2025 note [1]. The stock has been range-bound (12M hi/lo **US$5.67 / 3.12**) [9], suggesting the market is fully aware of the FCF inflection.
- CLSA's rating is **Outperform (O-PF) — NOT Buy** — and its 3-yr EBITDA cagr forecast is **slightly below consensus** [8], i.e., it bakes in slower Deliveries margin progression than the Street.

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## Net Take (CLSA framework)

| Pillar | Bull | Bear |
|---|---|---|
| **Top line** | +21% on-demand GMV YoY [11]; demand resilient through tariff noise [11] | Affordability push limits price/mix uplift [9] |
| **Mobility margin** | ~9% industry-leading, minimal downside risk [10] | Reinvestment caps upside beyond 8.8% [7] |
| **Deliveries margin** | Ads (~60% margin) cushions affordability dilution [6] | 4% target pushed out; CLSA at 2.8% base case [4] |
| **M&A** | GoTo deal could add +46% EBITDA/share [2] and ~80% Indonesia share [2] | Deal not in active talks; price tag rich [3] |
| **Balance sheet** | Highest net cash / market cap; strong FCF [8] | — |
| **Valuation** | TP US$5.25 raised from US$4.20 [10] | Only +3% implied upside at the time of note [1] |

**CLSA stance:** Outperform, TP US$5.25 [3]. The base-case thesis is that Grab compounds EBITDA at 40% Cagr without the GoTo deal — and any M&A is **upside optionality, not the central case** [4][8].

---

**Sources**
[1] Navigating M&A — CLSA (20 May 2025) — 607959955LinqAlpha.PDF
[2] Navigating M&A — CLSA (20 May 2025) — 607959955LinqAlpha.PDF
[3] Navigating M&A — CLSA (20 May 2025) — 607959955LinqAlpha.PDF
[4] Growth & profitability equilibrium — CLSA (30 Apr 2025) — 607957730LinqAlpha.PDF
[5] Growth & profitability equilibrium — CLSA (30 Apr 2025) — 607957730LinqAlpha.PDF
[6] EPS has potential to outperform — CLSA (24 Apr 2025) — 607956786LinqAlpha.PDF
[7] Growth & profitability equilibrium — CLSA (30 Apr 2025) — 607957730LinqAlpha.PDF
[8] Navigating M&A — CLSA (20 May 2025) — 607959955LinqAlpha.PDF
[9] Navigating M&A — CLSA (20 May 2025) — 607959955LinqAlpha.PDF
[10] EPS has potential to outperform — CLSA (24 Apr 2025) — 607956786LinqAlpha.PDF
[11] Grab Holdings Q2 2025 Earnings Call (30 Jul 2025)
[12] Grab Holdings Q4 2025 Earnings Call (11 Feb 2026)

## Citations

- [11] **CORRECTED TRANSCRIPT: Grab Holdings Ltd. (Singapore)(GRAB-US), Q2 2025 Earnings Call, 30-July-2025 8:00 PM ET** · external
- [12] **Grab Holdings Ltd. , Q4 2025 Earnings Call, 11-February-2026 7** · external

