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Singapore’s Sea tumbles 14% after wider-than-expected loss
Sea Ltd posted a bigger-than-expected loss, and withdrew its 2022 e-commerce forecast, joining other online giants struggling to gauge an increasingly uncertain global economic outlook.
Its shares dived 14% in New York on Tuesday (Aug 16), wiping US$800 million (RM3.57 billion) off the wealth of founder Forrest Li. Once Southeast Asia’s most-valuable company, Sea shares have now fallen almost 80% since peaking in October.
It’s been a steep downfall for one of Singapore’s most prominent tycoons, whose fortune has tanked almost US$17 billion from its highs. Li’s net worth of US$5.1 billion now makes him the fourth-wealthiest in the city state, according to the Bloomberg Billionaires Index.
The downbeat results came, after Sea cut its full-year e-commerce revenue outlook in May, to a low of US$8.5 billion versus US$8.9 billion previously. Shoppers emerging from Covid-19 lockdowns are cutting back on online purchases, shifting towards essentials during a potential recession.
The suspension of e-commerce revenue guidance “will no doubt send unease to investors sentiment”, said Alicia Yap, an analyst at Citigroup Inc.
Sea, which counts Tencent Holdings Ltd as its biggest investor, has suffered a run of setbacks this year, including a sudden ban of its most popular mobile game in India, and the subsequent closure of its e-commerce operations there.
The company has been trying to boost profitability as top-line growth plateaus. Second-quarter sales rose 29% to US$2.9 billion, the slowest growth in almost five years.
Key insights
Sea posted an adjusted loss before interest, taxes, depreciation and amortisation of US$506.3 million in the June quarter, surpassing the average projection of US$482.3 million. Its net loss more than doubled to over US$931 million.
In Southeast Asia and Taiwan, adjusted Ebitda loss per order for Shopee — before allocation of headquarters’ common expenses — was less than one cent. Chief executive officer Li affirmed a target for the business to hit positive adjusted Ebitda before headquarters costs in Asia this year.
Second-quarter revenue from Shopee, Sea’s e-commerce unit, gained 51% to about US$1.7 billion versus estimates of US$1.9 billion.
Revenue from gaming arm Garena fell to US$900.3 million, slightly ahead of estimates of US$827.6 million, as hit mobile game Free Fire matures. The company said in March it expected Garena to post US$2.9 billion to US$3.1 billion in bookings in 2022, set to be its first decline ever.
Revenue from SeaMoney, Sea’s digital financial services unit, rose to US$279 million.
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Sea has been reducing its overseas footprint, and slashing jobs in peripheral businesses, as competition takes a toll, and as it focuses more on profitability, a stark shift from its previous stance of spending for global expansion.
Shopee’s gross merchandise value, the sum of transactions flowing through its platform, rose 27% to US$19 billion.
Some investors are reducing their exposure to Sea. Tiger Global Management LLC sold US$473.8 million of Sea shares, cutting its holdings after six quarters of buying, according to Securities and Exchange Commission filings. Altimeter Capital Management LP, a shareholder of Singapore-based Grab Holdings Ltd, exited Sea’s Class A ADRs, according to an analysis of its filings by Bloomberg News.
- Bloomberg
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