$GRAB
This is a VERY big update in regards to Grabโs potential acquisition of GoTo.
The context and background:
- GoTo is Grabโs biggest competitor in Indonesia, also the largest population in the region
- Grab raised $1.5B of convertible debt (0% coupon) last month, many people assuming it would be to buy GoTo
- Mike
@MikeLongTerm has been campaigning for the past month to say Grab should NOT buy GoTo because their business is, for a lack of a better phrase, a pile of sh*t and does not deserve the rumored $7B premium. The stock is only worth $4B in public markets right now.
- A new investigation is showing a $600M corruption case with GoTo executives stealing money that was supposed to go to children to buy new chromebooks for them in schoolโฆdisgusting.
- As a result,
$GRAB may end up being able to buy GoTo at a VERY cheap price or the Indonesian government may work with Grab to facilitate a deal since the gov is not a fan of this type of corruption, especially when itโs from the premier tech company in your country.
- Other scenario: GoTo continues to burn money, the stock further tanks, and eventually has to shut down or sell themselves to Grab.
The larger point here is that even
$GRAB being GAAP profitable is so incredible because this region has very tight margins, massive competition, constant government oversightโฆ.but Grab is growing their profitability and free cash flow at a rapid rate AND has $8B in cash.
I have been buying shares aggressively (have options as well for 2027) this week in the $5.25-$5.50 range.
Would recommend following
@MikeLongTerm as he has been documenting this story in a major way. Gab
@GabGrowth has also put out a few threads this week on Grabโs business in regards to advertising margins, acquisitions, and more so would highly recommending following both of them as they cover the thesis.
Earnings next week, I continue to believe this is a long term compounder that is consolidating in a region that is growing GDP faster than anywhere else in the world.