Grab's AI Bet: Why the Stock Slumped on a Positive Catalyst

Grab's third-quarter results were a textbook beat. The company reported adjusted EBITDA of $136 million, up 51% year-over-year, with on-demand GMV growing 24%. Management raised its full-year EBITDA guidance, painting a picture of accelerating momentum. Yet the stock has done the opposite of pop. It is down 63% since its 2020 IPO and has fallen another 13% over the past month. This is the fundamental disconnect: a strong quarterly print that failed to move the needle because the market's skepticism was already priced in.

The problem is not the beat itself. It's that a single quarter of improved profitability does not answer the core question that has haunted Grab's valuation for years. Investors have consistently doubted the company's ability to achieve consistent long-term cash generation and profitability. For a stock trading at a fraction of its IPO price, that skepticism is baked into the share price. A quarterly EBITDA surge, even a 51% jump, is not enough to reset that deeply held expectation. It's a positive data point, but it doesn't rewrite the narrative of a business still in a high-investment, growth-at-all-costs phase.

This sets up the current AI investment as a critical test. The recent acquisition of Infermove is a bet on future efficiency and margin expansion. But for that news to matter, it needs to signal a credible path to the consistent cash flow the market demands. Until then, the expectation gap remains wide. The stock's weakness isn't about this quarter's results; it's about the market's persistent view that Grab hasn't yet proven it can cross the chasm from a high-growth superapp to a reliably profitable one.

The AI Catalyst: A New Bet or a Guidance Reset Signal?

The recent acquisition of Infermove is being scrutinized as a potential stabilizer for sentiment. The move into AI logistics is a clear bet on future efficiency and margin expansion. Yet its impact on near-term profitability is uncertain. Like all acquisitions, this could cause near-term margin challenges as Grab integrates the technology and scales its operations. The market is now weighing whether this is a necessary investment to compete or a costly distraction from the core task of achieving consistent cash flow.

Management's raised full-year EBITDA guidance to $490M–$500M suggests strong confidence in current operations. This guidance hike, following a 51% year-over-year EBITDA beat, signals that the company expects its core growth engine to keep firing. However, this raised target does not explicitly tie to the new AI spending. It creates a tension: the guidance resets expectations for 2025 profitability, but it does not price in the potential drag from a major new investment. The market is left to question if the guidance already accounts for this new cost center or if it represents a separate, unpriced risk.

The stock's reaction implies investors are skeptical. The acquisition was announced last week, and shares have continued to slide, dropping another 13% over the past month. This suggests the market is questioning whether this investment is a strategic bet on growth or a sign that Grab needs to spend more to fix existing operational inefficiencies. For a stock trading at a fraction of its IPO price, every dollar spent on a future bet is scrutinized against the immediate need for proof of profitability. Until the AI investment demonstrably moves the needle on margins, it may be seen as a necessary but unpriced risk that overshadows the positive guidance.

Valuation and the Path to a Guidance Reset

The disconnect between analyst optimism and the stock's weak performance is stark. While the market has been punishing Grab, Wall Street remains bullish. The median analyst price target sits at $6.95, implying a 50% upside from recent levels. This bullish consensus, built on a raised full-year EBITDA guide, suggests many analysts see the current valuation as a buying opportunity. Yet the stock trades at a steep discount to its 52-week high, down over 30% from that peak. This gap highlights a classic expectation arbitrage: the market's deep skepticism about Grab's path to sustainable cash flow has priced in far more pessimism than the analyst community currently assumes.

The next major test arrives in just over a month. Grab is scheduled to report its fourth quarter and full-year 2025 results after the U.S. market closes on February 11, 2026. This report is the critical catalyst that will either validate the raised guidance or force a reset. The market will scrutinize whether the company hit its $490M–$500M full-year EBITDA target and, more importantly, whether the cash flow trajectory supports the new investment in AI logistics. The expectation gap hinges entirely on this print.

For the bullish thesis to hold, the February report must confirm the raised guidance was not overly optimistic. It needs to show that the core business is generating the cash to fund future bets without sacrificing near-term profitability. Any sign that the AI investment or other costs are eating into margins could trigger a "guidance reset," where analysts lower their targets and the stock faces renewed pressure. The current setup is a high-stakes bet on Grab's ability to demonstrate that its growth engine is robust enough to fund its own future efficiency. Until the February results land, the expectation gap remains wide, and the stock's weak momentum is likely to persist.