Barclays initiates Grab stock coverage with Equal weight rating

Yahoo Finance Live anchors discuss a mixed note from Barclays on Grab Holdings.

Video Transcript

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JULIE HYMAN: I'm taking a look at Grab Holdings. The stock had been on the move lower, down 7% right now, after Barclays initiated coverage of the Asian delivery app with doubts over its long-term profitability.

Now, it's an equal-weight rating here. It's a neutral-weighting so it's interesting to see it taking such a hit. The price target being set at $3.00, as you see there. And the analyst says, car rental costs are a substantial burden for drivers and push up fares. The analyst does say that the company's a category leader in food delivery and ride hailing in Southeast Asia with a very strong competitive position.

So hence the equal weight-- a little bit of good, a little bit of bad. That said, Grab also might be getting caught up to some extent in just the selling that we're seeing in Asian trading. But this is a company, I believe it came public through a SPAC, if I'm not mistaken. And the stock has not done very well since it did come public through that.

BRAD SMITH: Yeah, you think about the ride-sharing environment-- not just here in the US, but internationally. And that's where Grab really gets pulled into the conversation there in the markets that they operate, where consumers right now for either the pricing that they're seeing higher or the options that are on the market in getting into micromobility or other forms of mobility within a broader parent app, if you will, as Uber's and Lyft has tried to add on some of that micromobility element.

For Grab, it's very similar but in a market where there is much more of that micro-ability-- micromobility, that is actually taken advantage of by the consumers here. So it's going to be, how do you reach profitability while building up some of the other mobility mechanisms for consumers? And knowing that you still have to make a lot of investments to retain drivers in one sense, but also decrease the operating per mile costs.

And that's going to be a significant headwind still for all of these companies, as they try to either dabble more in autonomous technology. And how quickly that comes forward is a question mark still up in the air at this point as well. But for Grab, that is gonna be something that they have to consider similarly as Uber and Lyft do.

BRIAN SOZZI: Why even bother with this? It's a $2.50 stock. Most people, I would say, watching this have never even heard of Grab or taking a Grab. If you were that hell bent on using-- or investing in a ride-sharing business, go with Uber. We just heard Brad Erickson saying, Uber is starting to really take market share from its largest competitor in the United States, Lyft. That might be the better way to play this space, if you really want to.