NEW YORK: Shares in Grab tumbled 37% on Thursday after South-East Asia’s No. 1 ride-hailing and food delivery firm posted a US$1.1bil quarterly loss and a worse-than-expected drop in revenue, hit by promotional offers and higher driver incentives.

Singapore-based Grab Holdings Ltd has poured money into incentives to attract drivers as ride-share demand recovers from pandemic lows, and also offered aggressive food-delivery promotions as people began to dine out more with the easing of Covid-19 restrictions.

But the incentives ate into sales in the fourth quarter ended Dec 31 - the first it has reported as a public company - which slumped 44% to US$122mil .

“We plan to be judicious and disciplined in allocating capital, as we double down on the long-term growth opportunities of our on-demand, advertising and financial services businesses,” chief financial officer Peter Oey said in a statement.

The loss for the whole year ballooned to US$3.56bil versus US$2.75bil in 2020.

Grab is fighting to retain its market-leader position in the face of stiffer competition from GoTo, a company formed by the merger between ride hailing app Gojek and e-commerce firm Tokopedia, as well as South-East Asian tech firm Sea Ltd.

Shares of Grab skidded to their lowest ever on Thursday at US$3.09 , wiping off more than US$7bil from its market value.

Since going public in December after a US$40bil merger with a blank-cheque firm, Grab’s stock has shed nearly three-quarters of its value.

Still, the incentives managed to boost gross merchandise volume (GMV), a measure of transaction volumes, which rose 26%.

Grab said it expects GMV growth between the second and fourth quarters of 2022 to jump 30% to 35% year-on-year, and predicted it would break even on an adjusted earnings before interest, taxes, depreciation and amortisation basis in its food delivery unit by the first half of next year.

“We believe the 30% sell-off in share price is unwarranted,” Citigroup analysts said in a note, adding that broad market weakness amid geopolitical instability might have prompted some investors to cut losses.

Revenue from Grab’s mobility unit, which accounted for 86% of overall sales, declined 27% in the quarter. Revenue from its food delivery services unit plunged 98%.

 - Reuters