Grab's Post-Earnings Price Bounce Masks Persistent Profitability Concerns

What happened

Grab Holdings released its Q4 2025 earnings on February 11, 2026, reporting revenue growth in On-Demand and Financial Services segments, as noted in a recent Zacks article. The share price subsequently rose 3% over the following week, reflecting short-term optimism about top-line performance. However, a critical review of SEC filings shows incentives remained at 10.4% of gross merchandise volume (GMV) in Q4, a level that threatens profitability if it increases. Moreover, operating cash flow plummeted to $79 million in FY2025 due to loan receivable outflows from fintech scaling, undermining cash conversion despite net profit. Thus, the price increase appears driven by superficial positives, while core issues of incentive discipline and cash flow volatility linger unaddressed.

Implication

The revenue growth highlighted in the article is positive but must be weighed against rising incentive costs and competitive pressures that could erode margins. Grab's affordability strategy boosts transactions but risks lowering per-user economics unless advertising revenue scales to offset take-rate compression. Financial services, while growing, remains loss-making and absorbs cash, challenging the sustainability of reported profits. Key near-term monitors include whether incentive intensity stays at or below 10.4% of GMV and if advertising growth continues at Q4's 23% YoY pace. Without improvement here, the stock's high valuation at 63x PЕ justifies maintaining a 'WAIT' rating until clearer proof of durable profitability emerges.

Thesis delta

The new article does not shift the investment thesis, which remains centered on proving that growth is funded by advertising rather than increased incentives. No change is warranted until Q1 2026 results confirm incentive discipline and cash flow stabilization, as outlined in the DeepValue report.