Grab: Laying off 11% of Workforce May Be Slightly Beneficial in the Long Term, but Too Early To Tell

Grab announced in an internal memo yesterday that it was laying off about 1,000 employees, which equates to about 11% of its total workforce. While the layoffs should provide some short-term reduction in operating expenses, we are not changing our fair value estimate yet given the lack of details including which divisions it may affect or how it could alter long-term growth. However, Grab indicated that layoffs were across the entire business. Two key points management emphasized were: 1. The layoffs are not related to instant short-term profitability and are instead to drive maintainable long-term growth. 2. The headcount reduction was not driven by its previous goal to reach companywide breakeven by the end of 2023, and that the company would have reached the target regardless. In addition, the decision was not influenced by any external pressure as management re-emphasized that it is to achieve long-term economic viability.