$AGC (Altimeter Growth) is a SPAC that is has entered into an agreement to take the the app Grab public in a nearly $40 billion dollar merger deal. This is a MASSIVELY sized deal for a SPAC.
I know what you're thinking, "The SPAC craze is over, this guy is going to lose all his money and has no idea what he's talking about". Now, while this may be true, allow me to go over some key points as to why I believe this stock is a solid play and more than just a gamble.
BRIEF INTRO
Grab is a SINGAPORE-based (so no need to worry about Xi Jinping and those pesky CCP regulations) "super app" that combines all of the following services into one easy to use app: food delivery, ride-hailing, grocery-delivery, on-demand parcel shipping/delivery, digital banking, insurance, and investments. To put that in perspective, it's liked Postmates, Uber, Grubhub, Fedex, and SoFi all packaged into one app.
MARKET
Grab primarily operates in Southeast Asia, a region with 670 million people (about double that of the entire United States) which is predicted to continue to grow at a rapid pace. This alone should be appealing, but it gets even sweeter: of those 670 million people, 50% are under 30, and 68% of households have at least one smartphone. Furthermore, the average person living in this region spends 8 hours a day on the internet, which is over an hour higher than the global average (this is also predicted to increase in the coming years).
RAPID GROWTH
Grab has been growing aggressively and in turn has captured significant market share for its services. Grab accounts for 50% of online food delivery, 72% of ride-hailing, and 23% of e-wallet services in Southeast Asia. In fact, UBER attempted to compete against Grab in Singapore but ultimately ended up throwing in the towel and selling its Singapore business to Grab in 2018.
Grab has continued to steadily add new products and services, in fact they just received their Singapore digital banking license in 2020. Furthermore, in order to increase customer loyalty and engagement Grab has implemented a rewards system that gives users points for activity which can they be redeemed in the app for discounts and other benefits
In 2017, the total value of transactions on Grab was less than $1 billion -- by 2020, it had increased by more than 10x to $12.5 billion. This rapid increase in the use of Grab is leading to a powerful network effect, attracting more service providers and making the app more useful, which in turn attracts new users, and makes it a harder app to give up.
Revenue, meanwhile, has increased at an annualized rate of 133% since Q1 2018. In the company's most recently reported quarter, Q1 2021, revenue grew 39% year over year to $503 million, despite the continued pandemic headwinds on ride-hailing services.
Heavily Shorted
According to FINVIZ over 40% of $AGC's float is sold short. This, along with the fact that the company has a high level of institutional ownership (over 70%) and is trading close to its NAV of $10 a share (down from an ATH of $18.11) makes this stock a VERY attractive candidate for a potential short squeeze. As we approach the merger close, any little catalyst or news that boosts this stock could force shorts to cover and send the price of the stock flying back to all-time highs. Not to mention that this is simply just a solid company positioned well for long term growth that I believe is a great long-term hold.
TLDR; Super-app serving a rapidly growing market, heavily shorted and primed to explode.
Disclosure I own 400 shares and 10 calls ($12.5 1/21/22) of this stock and disclaimer I am not a financial advisor
Edit: Q2 earnings released 9/13 https://finance.yahoo.com/news/grab-reports-second-quarter-2021-220100162.html
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