Market decline

Sea’s market decline hits US$132 billion as gaming arm faces slowdown

SINGAPORE (BLOOMBERG) – Sea Ltd., once the world’s hottest stock, has lost more than US$130 billion in market value since its peak last year after a disappointing earnings report worsened his misfortunes.

The Singapore-based company issued a subdued outlook for its digital entertainment unit and its shares fell 13% in U.S. trading. That slashed its market valuation by US$11 billion, pushing its total decline to US$132 billion from its October peak.

Investors balked as the mobile games company forecast between $2.9 billion and $3.1 billion in bookings in its digital games arm, expected to be its first drop. This compares to last year’s bookings of US$4.6 billion.

Sea said he expects e-commerce revenue growth to continue unabated as it expands in Latin America, trying to reassure investors after losing half of its market value in just a few month.

The Singapore-based company expects e-commerce sales, its main source of revenue, to reach $8.9 billion (S$12.1 billion) to $9.1 billion this year, from $5.1 billion last year, according to its release Tuesday.

Bookings for Sea’s other major business, the games division, which is facing headwinds in India, are expected to drop for the first time.

Total fourth quarter revenue more than doubled to US$3.2 billion. Net loss widened to $617.6 million from $523.6 million as Sea spent more to gain market share in new geographies.

Sea is trying to consolidate its early successes in Brazil, where it launched its online retail business in 2019. Still, the company faces intense competition from Latin American e-commerce giant MercadoLibre.

Meanwhile, the online shopping arm is pulling out of France, pulling out of a major market just months after launching its first foray into Europe. The unit, Shopee, will focus on Southeast Asia, Taiwan and Brazil, Sea said.

Other markets are unaffected, Shopee said in a statement Wednesday, March 2. “Following a preliminary short-term pilot project, we have decided not to continue the Shopee service in France…we continue to take an open and disciplined approach to exploring new markets,” he said. added.

ST understands that the pilot was a small-scale test.

Sea pulling out of a market where they see low hopes after a pilot is a good sign, said DBS Bank analyst Sachin Mittal. “It reflects a more disciplined approach focused on profitability,” he added.

It will take much more than leaving the French market to have a significant impact on Sea, said Associate Professor Lawrence Loh of the National University of Singapore (NUS) Business School.

Acknowledging that the French online retail market is likely to be a challenging and unique environment for any foreign player, Professor Loh added that consumer behavior in the French retail market might be different, as many prefer still shop in physical stores.

“While the Free Fire issue is still being worked out in India, Sea is fundamentally a solid company. It has fundamental strengths in its products, technologies and human capital, especially its leadership,” he said. he declares.