Uber (UBER) stock price is thriving as the company continues to consolidate its market share around the world. In the US, it has continued to beat Lyft, its closest competitor, which has been languishing from a competitive and profitability side. Uber shares have surged in the past four straight months and are now sitting at their all-time high. Its market cap has jumped to over $147 billion. 

Uber’s strength continued to show this week after the company published strong financial results and delivered its first annual profit on record. These results showed that its business model of combining mobility and food delivery was working. 

Now, Uber might be about to get a bigger competitor in the Asian region. According to Bloomberg, Grab (GRAB) and GoTo are said to be about to merge in a deal that would create a behemoth. Grab, based in Singapore, has a market cap of over $12 billion while GoTo is valued at over $5 billion. 

Uber stock vs GoTo vs Grab

A merger, if it happens, will create a major company that will be in a better position to compete with Uber, which has a bigger market share in the mobility and food delivery industry. One option for the deal is where Grab acquires GoTo in a cash and stock deal.

The other option is where the two cede their respective markets. In this scenario, Grab will specialize in Singapore while GoTo will focus on Indonesia. This is an unlikely scenario in my view since Grab will not want to cede the bigger Indonesian market.

The biggest risk for this deal is related to regulations. Because of their size, Singapore and Indonesian regulators will likely intervene because of nationalistic views. Also, they will be concerned that a merger will be bad for consumers who are used to pay low prices for their trips. 

The companies will likely refute these claims, arguing that the deal will make them profitable through cost-saving mechanisms. Also, they will say that a bigger company is the best way to beat Uber, which has become a major company in the region. 

GoTo and Grab shares have been under pressure in the past few months as they struggle to become profitable. Grab stock has crashed by 73% since going public in 2021.

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