Why Is Grab Stock Trading Higher On Tuesday?

Shares of ride-hailing, food delivery and digital payment services provider Grab Holdings Ltd. GRAB are trading higher on Tuesday.

According to a Bloomberg report, Grab and the Indonesian technology company GoTo have resumed discussions about a potential merger, which they aim to complete by 2025.

These talks have continued for some time, with an executive emphasizing that the merger must occur by 2025, or it won't happen at all, according to a report by DealStreetAsia.

Grab, which trades on the Nasdaq, and Indonesia-based GoTo are major players in Southeast Asia's tech sector, especially in ride-hailing and food delivery.

The proposed merger is anticipated to strengthen both companies' ability to compete with bigger rivals, especially Uber Technologies Inc. UBER, a dominant player in the region.

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Both Grab and GoTo receive backing from Japan's SoftBank Group Corp SFTBY.

While the companies have explored merger options intermittently over the years, the current discussions seem to be gaining more traction.

With considerable overlap in their offerings, many experts view the merger as a sensible move. It could potentially strengthen both companies' positions in fintech and improve their ability to compete in a fast-expanding yet highly competitive market.

Grab, which became publicly traded in 2020 through a merger with a special purpose acquisition company (SPAC), is now valued at $18.28 billion. Meanwhile, GoTo is estimated to be worth 85.85 trillion rupiah (around $5.25 billion).

Today, HSBC analyst Piyush Choudhary upgraded Grab stock from Hold to Buy and lowered the price forecast from $5.5 to $5.45.

Price Action: GRAB shares are trading higher by 12.80% at $5.12 at the last check Tuesday.

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