Shares of an e-commerce and gaming company in Southeast Asia sea group It popped up after first-quarter revenue beat analysts’ expectations on Tuesday.
US-listed Sea shares rose 14% to close at $80.21 after the Singapore-based internet company reported revenue that beat analysts’ expectations in the first quarter of this year.
Here’s how the NYSE-listed company fared from January to March:
- Revenues: $2.9 billion versus $2.76 billion as analysts had expected, according to Refinitiv.
- net loss: $580.1 billion versus the $722 billion analysts had expected, according to Refinitiv.
Sea’s revenue was up 64.4% from the same period a year earlier, but was down about 9.5% from $3.2 billion in revenue in the previous quarter, a sign that after two years of pandemic-led sales, growth is beginning to plateau.
Online shopping platform Shopee and gaming arm Garena have grown more slowly as countries have opened up.
SINGAPORE, SINGAPORE – 2021: A large Shopee logo at the entrance to the e-commerce platform headquarters in Science Park. (Date of shooting is unknown due to incorrect camera settings)
cocaine | Istock Unreleased | Getty Images
The company warned that inflation and supply chain disruptions could affect business, even as losses continue.
“As we enter a new period, we recognize that the current macro trend and uncertainties can impact our region and our world in the near term,” said Forest Lee, CEO and co-founder of Sea during the earnings call.
Shopee and Garena, Sea’s two major money-making divisions, both experienced lower revenue compared to the previous quarter.
E-commerce: Shopee
Shopee’s e-commerce revenue was $1.52 billion in the first quarter, down from $1.59 billion in the previous quarter. Exorbitant logistical and marketing expenses led to a loss of $810 million — $131 million less than the previous quarter.
The company revised its full-year revenue guidance for Shopee to between $8.5 billion and $9.1 billion, citing a “higher overall degree of uncertainty.”
Yangon Wang, Sea’s chief corporate officer, noted that the company had not lowered its guidance, but rather expanded it as a way of caution. Its previous guidance was between $8.9 billion and $9.1 billion.
But the amount people spend on each order could trend downward, according to Christine Lau, an analyst at research firm Third Bridge.
“The effect of inflation on discretionary spending is one,” she said, referring to non-essential items such as entertainment and luxury goods.
“For a lot of high-frequency items or daily necessities that people have had to buy online – either we’re out of stock offline or it makes sense to use Shopee when everything is on lockdown – I think a lot of that will be reallocated. for offline retail,” Lau added.
Games: Garena
Garena, which has long been a profit maker for Sea, posted sales of $1.1 billion. Game segment net profit increased 52.2% (or $432 million) compared to the same period last year, but decreased 23.5% (or $859 million) from the previous quarter.
Quarterly active users are down 32.9 million year-over-year, while paying quarterly users have fallen by more than 18 million to 61.4 million from 79.8 million last year, matching concerns that there is now weak demand for mobile games in a post-pandemic world. . .
Much of the loss can be attributed to the ban in India as well. Earlier this year, India banned the successful mobile game Free Fire from Garena, along with 53 other apps with links to China.
Chinese tech giant Tencent He is a major shareholder in Sea. in january, Tencent sold $3 billion Al Bahar shares value, reducing its stake from 21.3% to 18.7%.
selling technology
Sea shares have been hurt by the broader tech sell-off. Its stock is down more than 80% since its October 2021 high of $366.99. Prices fell to a two-year low of around $57 earlier this month.
Investors are also wary of its cash-burning model, and Sea has spent hundreds of millions, even billions of dollars every quarter on marketing, particularly on subsidies to lure consumers and merchants to Shopee, which competes with the likes of AmazonAnd Ali BabaLazada in Southeast Asia, and Mercado Libre in Latin America.
Shopee has a presence in 13 countries and is in Southeast Asia, Latin America and Europe. It pulled its Shopee business out of India and France in March of this year, just months after venturing into the two countries.
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