Tencent-backed, Sea Limited, has lost more than US$130 billion in market value from its all-time high after a disappointing earnings report.
In 2017, The Singapore-based company raised about US$884 million in its initial public offering on the New York Stock Exchange with US$15 a share.
Just mid-October last year, the consumer internet company was valued at US$200 billion with US$366.99 a share, as the demand for its digital entertainment, e-commerce, and digital payments businesses were boosted by the pandemic.
Key Takeaways
- Sea Limited's shares plunged 13% in United States trading last Tuesday, cutting its market valuation to US$65 billion.
- Sea reportedly generated US$10 billion in revenue last year, more than double of 2020, but its net loss increased from US$1.6 billion to US$2 billion.
- The company's largest revenue source would be from Shopee, its e-commerce arm, forecast to be at US$9.1 billion, 78% increase from last year.
- As for its digital payments business, SeaMoney, its revenue is expected to increase 177%, to US$1.3 billion.
- However, Sea Limited's gaming arm, Garena, does not seem to have a positive outtake.
- Garena's bookings is forecast between US$2.9 billion to US$3.1 billion compared to US$4.6 billion last year, marking its first decline ever.
Factors of Sea's Decline
- Tencent reduced its stake from 21.3% to 18.7%, recently on January, sparking a sell-off among investors.
- The company was heavily affected by the recent ban issued by India on Chinese mobile apps, including its "Free Fire" mobile game.
- "Free Fire" was removed from India's Google Play Store and Apple's App Store, as the Indian government believes user data from the app was sent to servers in China.
- This implicates Shopee as well due to the ban on "Free Fire" lowering digital entertainment profitability to bankroll Shopee's expansion.
- Moreover, Shopee is facing boycott calls by traders in India over concerns that it is affecting offline traders.
