Billionaire Forrest Li’s Sea Sinks Deeper Into The Red As Shopee Losses Widen, Expenses Surge

Sea Ltd.-controlled by billionaire Forrest Li_-sank further into the red during the first quarter, as losses at Shopee’s e-commerce platform, grew and expenses soared.

On Tuesday, the net loss for the Singapore-based eCommerce and gaming company grew to $580 million from $422 million. The company stated that overall revenue rose 64% to $2.9Billion, but operating expenses rose 68% to $1.7B due to higher marketing and research and development costs.

Sea is consolidating its e-commerce business after a recent global expansion drive. Sea retreated from India and France in March to concentrate on the key markets of Brazil, Southeast Asia, and Taiwan. Shopee’s e-commerce revenues increased 64% to $1.5billion compared to last year. However, Shopee’s operating loss rose 77% to $810.6m.

Li stated that “in the past two years, we have successfully navigated major uncertainties caused by the pandemic to capture the significant growth possibilities presented to us across all our businesses.” We recognize that current macro trends and uncertainties could significantly impact our region and the rest of the world in short to medium-term.

The Russian invasion of Ukraine has slowed the global economy. Rising interest rates and rising commodity prices have lowered the outlook. Consumers who returned to work after the pandemic lockdowns over the past two years are beginning to reduce their online purchases.

Although digital entertainment, Sea’s most profitable business, saw a 45% increase in revenue to $1.1 billion during the first quarter collate to the previous year, bookings fell 26% to $800 million. After India banned its mobile game Fire, its most popular gaming platform, active users fell by 5% to a 615.9million.

Sea’s share price plunged almost 80% after Tencent, a Chinese tech giant, reduced its stake in the company. This was in addition to the ban in India and Tencent’s decision to sell off its stake. The October record high of $366.99 per share saw in October has fallen to $264.99. The stock has been rising since its New York Stock Exchange debut in 2017. This was due to the rapid growth during the pandemic when demand for Sea’s online gaming and e-commerce businesses increased. Tencent began selling Sea shares.

The decline in Sea’s share prices has hurt the fortunes of its three founders. It fell to $4.6billion this week, from $15.9billion in August, when Singapore’s 50 Richest lists were released. In 2009, Gang Ye, along with David Chen, co-founded Sea. This was the year that the online gaming platform Garena was launched. The partners, originally from China, are now naturalized Singaporeans.

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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