Grab’s slowing growth and brutal layoffs reflect Super App challenges 🫣; Shares wants to be the ‘Louis Vuitton’ of trading apps 👀
FinTech is Eating the World, 30 June
Hey Everyone,
Happy Saturday! We’re finishing the week on a weekend, but it’s definitely worth the wait. Today we’re looking at Grab whose slowing growth and brutal layoffs reflect Super App challenges (+ a bonus deep dive into Apple as potentially the first Super App of the West), and Shares which wants to be the ‘Louis Vuitton’ of trading apps (can it & what should they learn from Robinhood). Let’s jump straight into the cool stuff 🌶
Grab’s slowing growth and brutal layoffs reflect Super App challenges 🫣
The news 🗞 Asian Super App Grab GRAB 0.00%↑, known for its ride-hailing and food delivery services, has announced significant layoffs, affecting about 11% of its workforce.
This is the group’s largest round of layoffs since 2020 when it cut 360 jobs in response to Covid-19 pandemic challenges.
More on this 👉 The move comes after the company reported slowing user growth, decreased user spending, and ongoing net losses.
Grab's CEO Anthony Tan framed the layoffs as a response to changes in technology, capital markets, and increased competition. The company reportedly aims to adapt to the evolving environment and achieve profitability, committing to being "Group Adjusted EBITDA breakeven" by the end of the financial year. That’s ambitious.
We must note that Grab had previously refrained from major layoffs, unlike its regional competitors Sea and GoTo, but the current market conditions and challenges have led to this strategic reorganization. Tan hinted at potential further measures such as divestments or service sunsetting to align with long-term strategies.
For context, it must also be noted that Grab was hiring quite aggressively last year:
The USP 🥊 As a refresher, we can remember that founded in 2012 as a regional ride-hailing app in Malaysia, Grab has since added food and grocery delivery, mobile banking, and payments and now operates a Super App across Southeast Asia.
Grab did the largest SPAC deal ever back in December 2021. Shares Grab opened the trading day of the debut at $13.06 apiece which valued the company at nearly $40B.
Since then the company lost more than 70% of its value. That’s brutal…
✈️ THE TAKEAWAY
What this means? 🤔 First, we must note that Grab operates in a market with a large market opportunity and low penetration across their verticals (especially food delivery and rides), which effectively means a huge potential upside. Second, all-in-one platforms aka Super Apps are super convenient for users, but that comes at a cost - you need heavy investments towards growth and only massive scale could justify your business economics. Grab’s latest results once again prove that profitability remains a key challenge for the Super App operator as it faces strong competition. To combat that, Grab has offered generous driver incentives and consumer discounts since early 2022, looking to make rival GoTo's mobility business irrelevant in Singapore. But that obviously hurt and will continue to hurt Grab’s margins, not to mention that the FinTech Super App is losing delivery market share in Indonesia to regional tech rival Sea. Therefore, it’s yet another proof that FinTech is hard, but Super Apps are even harder. That said, being a publicly-traded stock, Grab must convince investors that it has a clear plan for profitability. Otherwise, the public markets can be even more brutal, and bigger selling pressure will inevitably arise. Zooming out, we must note that this also brings some food for thought when it comes to Super Apps per se. First, it’s all about the cost, which primarily has to do with bigger privacy and regulatory concerns. As antitrust scrutiny heats up, becoming a super app could get increasingly harder for US tech titans, not to mention their European counterparts (think Square, Revolut, PayPal, and Klarna, among others). Second, growing competition will inevitably lead to lower margins and growing customer acquisition costs, as well as increased focus on differentiation.
On the other hand, this might be a massive opportunity for the BIG Guys. And the biggest of them all is obviously Apple AAPL 0.00%↑.