Sea's Stock Plunge Adds to Forrest Li's $17 Billion Wealth Drop From Peak

·3 min read

(Bloomberg) -- Sea Ltd. posted a bigger loss than expected and withdrew its 2022 e-commerce forecast, joining other online giants struggling to gauge an increasingly uncertain global economic outlook.

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Its shares dived 14% in New York, wiping $800 million off the wealth of founder Forrest Li. Once Southeast Asia’s most-valuable company, Sea’s 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 $17 billion from its highs. Li’s net worth of $5.1 billion now makes him the fourth-wealthiest in the city-state, according to the Bloomberg Billionaires Index.

Sea Tumbles as Macro Uncertainties Cloud Outlook: Street Wrap

The downbeat result came after Sea cut its full-year e-commerce revenue outlook in May, to a low of $8.5 billion versus $8.9 billion previously. Shoppers emerging from pandemic lockdowns are cutting back on online purchases, shifting toward essentials during a potential recession.

The suspension of e-commerce revenue guidance “will no doubt send unease to investors sentiment,” said Alicia Yap, 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 topline growth plateaus. Second-quarter sales rose 29% to $2.9 billion, the slowest growth in almost five years.

Key Insights

  • Sea posted an adjusted loss before interest, taxes, depreciation and amortization of $506.3 million in the June quarter, surpassing the average projection for $482.3 million. Its net loss more than doubled to over $931 million.

  • In Southeast Asia and Taiwan, adjusted Ebitda loss per order for Shopee -- before allocation of headquarters’ common expenses -- was less than 1 cent. Chief Executive Officer Forrest Li affirmed a target for the business to hit positive adjusted Ebitda before HQ costs in Asia this year

  • Second-quarter revenue from Shopee, Sea’s e-commerce unit, gained 51% to about $1.7 billion versus estimates of $1.9 billion.

  • Revenue from gaming arm Garena fell to $900.3 million, slightly ahead of estimates for $827.6 million, as hit mobile game Free Fire matures. The company said in March it expected Garena to post $2.9 billion to $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 $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 $19 billion.

  • Some investors are reducing their exposure to Sea. Tiger Global Management LLC sold $473.8 million of Sea shares, cutting its holdings after six quarters of buying, according to SEC 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.

(Updates with founder’s loss of wealth from the second paragraph)

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