Sea Ltd, once the world’s hottest company, has lost more than US$130 billion in market value since its peak last year, following a dismal results report that compounded its problems. The Singapore-based firm issued a cautious outlook for its digital entertainment division, and its stock dropped 13% in US trading. This knocked US$11 billion off its market value, bringing its total loss to US$132 billion from October’s high.
Investors reacted negatively to the mobile gaming company’s prediction of US$2.9 billion to US$3.1 billion in digital gaming bookings, which would be its first such decrease. This compared to US$4.6 billion in bookings last year.
Yanjun Wang, Sea’s group chief corporate officer, said in a conference call on Tuesday night that the company had factored in a slowdown in online activity and unexpected government moves in India in its projection.
Sea, whose major investor is Tencent Holdings Ltd, is facing greater regulatory scrutiny in India. After New Delhi abruptly banned its most popular mobile gambling title, Sea lost more than US$16 billion in value in its most significant day decline, illustrating the geopolitical obstacles it confronts in expanding its offering beyond Southeast Asia.
While the reduction in digital entertainment bookings isn’t entirely unexpected given slowing user growth and the negative impact of fast-growing India, Citigroup Inc analysts noted in a note that the extent of the drop was nevertheless surprising.
Investors were reassured by the company’s concentration on e-commerce sales development, which it expects to continue unabated as it concentrates on Southeast Asia, Brazil, and Taiwan.
E-commerce sales, the company’s primary source of revenue, are expected to increase from US$8.9 billion to US$9.1 billion in 2022, up from US$5.1 billion in 2021.
Sea is attempting to build on its early success in Brazil, debuting its online shopping service in 2019. Nonetheless, MercadoLibre, a Latin American e-commerce behemoth, is a competitor. Sea said on Tuesday that its online shopping subsidiary, Shopee, will exit France, a large country it had only recently entered.
