Ride-hailing services, like those offered by Grab Holdings (NASDAQ:GRAB), have long been regarded as useful additions to our everyday way of life. But when regulators start looking at them hard enough, it can mean trouble. One need only ask Uber (NASDAQ:UBER), Lyft (NASDAQ:LYFT) or now, Grab Holdings, who lost nearly 7% in Wednesday afternoon’s trading.
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Specifically, Grab Holdings ran afoul of regulators in Singapore, a country widely-known for such punctilio as a $1,000 fine for failing to “properly” dispose of chewing gum, and a $300 fine for first-offense littering of anything smaller than a drink can. In this case, it’s the Singapore Land Transport Authority who will be examining Grab more closely. It will be considering the overall supply of taxis as well as ride-hailing operations in a bid to make point-to-point travel supply more “stable” overall. The Singapore Land Transport Authority also noted that there are time periods, like late at night, when rides are in short supply.
This is reasonable, when you think about it; drivers wouldn’t want to work late at night any more than is strictly necessary, as providing service at that time is more dangerous. It’s also less in demand, which makes the supply lower as no provider wants to risk paying drivers to sit and do nothing. Yet, given reports that note Grab is mainly a delivery service as much as it is a cab replacement, it’s a safe bet it will come off well against government investigations. It’s designed to supplement systems already in place, not replace those systems, which should make Grab’s part clear as a part of a broader operational ecosystem.
For the most part, analysts are all in favor of Grab. Grab Holdings stock comes with 11 Buy ratings and one Hold, which makes it a Strong Buy in consensus terms. Further, with an average price target of $4.70, Grab Holdings also comes with 32.58% upside potential.
