Why Grab Holdings Stock Swooned by Almost 4% Today

Key Points

• A rally in the delivery specialist's shares has become overheated, one analyst believes.

• This is a key reason he downgraded his recommendation on its stock.

• 10 stocks we like better than Grab ›

The stock of Asia-based delivery service Grab Holdings (NASDAQ: GRAB) wasn't being grabbed by scores of American investors on Hump Day. It's likely at least some of these folks were aware that the company was the subject of a recommendation downgrade by an analyst, since its stock sank by nearly 4% that trading session. By comparison, the S&P 500's (SNPINDEX: ^GSPC) marginal 0.1% decrease was mild.

Grab and go no more

One institution that seems less eager to grab Grab is global bank HSBC, whose analyst Piyush Choudhary was the one behind the downgrade.

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Well before the market open on Wednesday, Choudhary changed his Grab recommendation to hold, where previously he was a buy. He did, interestingly slightly increase his price target while doing so; this is now $6.20 per share, up from the preceding $6.

The analyst expressed particular concern with the recent run-up in the company's share price, according to reports. Bargain hunters had been piling into the stock when it started to hit significant lows. Choudhary wrote that it's a good time for investors to take something of a break from the rally, as the inflated stock price has pushed valuations into fair-value territory.

A bullish note or two

The analyst had several positive things to say about Grab and its business, going so far as to increase his estimates for gross merchandise value (GMV) and earnings before interest, taxes, depreciation, and amortization (EBITDA) for the full years 2025 to 2027. This is also the reason for his price target bump.

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HSBC Holdings is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Grab and HSBC Holdings. The Motley Fool has a disclosure policy.