Sea’s Market Decline Hits $132 Billion as Stock Tumbles Again

(Bloomberg) -- Sea Ltd., once the hottest stock in the world, has lost more than $130 billion in market value from its peak last year after a disappointing earnings report that added to its woes.

The Singapore-based company gave a muted forecast for its digital entertainment unit and its shares fell 13% in U.S. trading. That cut $11 billion from its market valuation, pushing its total decline to $132 billion from its high in October.

Investors balked as the mobile gaming company forecast $2.9 billion to $3.1 billion in bookings at its digital gaming arm, set to be its first decline ever. That compares with last year's bookings of $4.6 billion.

The company had factored in a slowdown in online activity and unexpected government actions in India in its forecast, Yanjun Wang, Sea's group chief corporate officer, said on a conference call on Tuesday night.

“We are giving back some of the gains we made partially during Covid and with additional discounts to reflect the situation in India, which is highly unfortunate,” Wang said. “Given the uncertainty we are facing, it's probably more art than science for us.”

Sea, which counts Tencent Holdings Ltd. as its biggest investor, faces increased regulatory scrutiny in India. Sea lost more than $16 billion of its value in its biggest daily drop after New Delhi abruptly banned its most popular mobile gaming title, underscoring the geopolitical challenges it faces in expanding its offering beyond Southeast Asia.

While its digital entertainment booking outlook isn't entirely unexpected due to slowing user growth and taking into consideration the negative impact from fast growth market India, the magnitude of the decline was still a shock, Citigroup Inc. analysts wrote in a note.

Sea Ltd. Sinks, Gaming Outlook Worse Than Expected: Street Wrap

The company sought to assuage investors by focusing on e-commerce revenue growth, which it expects to continue unabated as it focuses on key markets of Southeast Asia, Brazil and Taiwan.

The Singapore-based company expects e-commerce sales, its main source of revenue, to rise to $8.9 billion to $9.1 billion in 2022 from $5.1 billion in 2021.

Sea is trying to cement its early success in Brazil, where it launched its online shopping business in 2019. Still, the company is facing competition from Latin American e-commerce giant MercadoLibre. Sea on Tuesday said its online shopping arm, Shopee, will pull out of France, a major market it entered just months before.