Lifetime Membership What a devastating plunge! From $13.06 on its first trading day (2 December 2021), Grab share price plunged by 80% to reach the abysmal level of $2.90. The terrifying nose-dive made Grab shares one of the worst IPO performers in recent memory, triggering plenty of soul-searching among investors.
Lately, one of my Lifetime Members wrote in to enquire about the disappointing performance of the “Super App” in Nasdaq. He also enquired if Grab should be listed in Southeast Asia instead of US. Indeed, much ink has been spilled on the volatility of Grab share price. I will attempt to cover the poor performance of Grab share price from another perspective.
When Grab debut in Nasdaq, data revealed that the short interest volume (29.4 million) had already exceeded the average daily share volume (26.7 million). To be frank, this is nothing out of ordinary. In the US market, short selling attacks are very prevalent. But what is intriguing is that the short interest for Grab surged consistently since IPO to reach more than 4-fold.
Based on the short interest data, it appears to me that the short-sellers have very bearish outlook for Grab share price. In fact, the volumes of short interest in the past six months are also not showing any signs of peaking. In this regard, those who are on the long side need to be careful to avoid catching the proverbial falling knife. To compound matters, the sharp drop in Grab share price has led to a slew of class action lawsuits against the Singapore-based company.
In early March and April 2022, Grab faced two class action suits from a “class of persons who allegedly suffered damages as a result of alleged misstatements and omissions” in the SEC filings by Grab. Since then, there were a few more potential lawsuits against Grab. Although class action lawsuits against listed companies are fairly rare in Singapore, it is very common in the US.
And this brings about the next question: if a listing in the US market brings so many risks and troubles, why did the company not seek a listing in Singapore? The conundrum faced by Grab is not unique as the operandi modus of tech companies is not favoured in SGX. Tech companies like Sea and Grab have been racking in billion of losses since listed in US. For example, Sea has never been profitable since IPO, incurring US$1.6 billion losses in FY2020 and US$2 billion losses in FY2021. As both Sea and Grab are based in Singapore, it is logical that they should be listed in SGX and not in another Southeast Asia bourse. Interestingly, GoJek, which has been incurring billion of losses, managed to get listed in Indonesia stock market in April 2022.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested in Grab currently. Whether Grab share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
Grab share price to sink or swim?
Whether Grab should be listed in US, Singapore or other Southeast Asia bourses is a matter subjected to academic debates. In my view, the issue for the IPO is [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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