Grab shares to surge over 80% to $12.5 by 2022 end, forecasts JP Morgan

Grab‘s first few days of public life haven’t been the easiest, with its shares ending last week at US$7.12 apiece, which is roughly a 45.5% discount to its opening price on December 2. Tech in Asia also recently reported that the Singapore giant’s shares may slump further in the first half of 2022 as more stock is released to the public.

However, there may be a bright light at the end of the tunnel for Grab to drive through in 2022.

Image credit: Tech in Asia

See also: Grab shares may drop further as more stocks flood the market

Grab’s attraction

JP Morgan has recently given the Southeast Asian super app an overweight rating when it initiated coverage on the stock. This is generally a recommendation to buy Grab’s stock, with the expectation of strong future performance.

The investment bank attributes this rating, in part, to Grab’s massive presence in Southeast Asia. “In our view, Grab’s super-app ecosystem gives it a structural competitive advantage over peers with fewer services and limited geographical presence,” the JP Morgan report read.

Starting out as a with ride-hailing service, Grab has since entered fintech, logistics, and food delivery, among a number of other spaces. It also recently secured licenses for digital banking in Singapore and Malaysia. This makes Grab one of the most active startups in Southeast Asia in terms of the number of verticals it operates in.

According to JP Morgan, its wide regional net allows Grab to hold on to customers longer, with its one-year retention numbers climbing as consumers use more of its services.

Consumers may also step up their in-app spending as they continue to use the company’s services. According to the report, users of the super app spent roughly 3.6x more in 2020 than they did when they first set up their accounts in 2016.

See also: Grab’s position in SEA’s startup landscape

Nirgunan Tiruchelvam, the head of Tellimer’s consumer sector equity research, agrees with the analysis. He said in his recent report that Grab’s potential as a super app has yet to be fully reached.

Tiruchelvam has recently initiated coverage on Grab with a “buy” rating and a target price of US$13 by the end of 2022, while JP Morgan pegged it at US$12.5.

More to come from mobility

Another point the two reports agree on is the mobility segment could be a catalyst that drives a recovery in Grab’s share prices.

In its coverage, JP Morgan said that the segment could get over US$1 billion in annual cash flows as movement restrictions ease and economies reopen.