We argued recently that Comfort DelGro, Singapore’s biggest cab operator, was making a gross strategic mistake by seeking to partner with Uber (https://thelowdown.momentum.asia/comfort-delgros-potential-tie-uber-not-enough-revive-fortunes/).
We believed that Comfort stock price should be going down, rather than up, following the news.
The free fall
After we published that article, Grab, Uber’s main competitor in the region, put up an aggressive stance. They offered drivers generous incentives to jump from Comfort to companies that partner with Grab.
This sent Comfort DelGro’s share price to almost free fall.
We do not think Grab’s incentives are a significant impact to Comfort. Losing the market position and negotiation power is the long term, perhaps irreversible, stab in the heart for Comfort DelGro.
Amazingly, many analysts believe Comfort is undervalued. Analyst reports aggregated by Yahoo Finance show that only less than 20% of the recommendations indicate “under perform” or “sell”. And they put an average price target of S$2.4.
Oh boy – do they really not see what is coming?