Business

Sea’s Loss Bigger Than Expected Due to Increase in Consumer Spending

(Bloomberg) – Sea Ltd. posted larger-than-expected losses and withdrew its e-commerce forecast for 2022, joining other online giants struggling to gauge the increasingly uncertain global economic outlook.

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The Singapore-based company posted an adjusted loss before interest, tax, amortization and amortization of $506.3 million for the June quarter, beating the median forecast of $482.3 million. . Sea shares fell 6% to $84.63 at 9:48 a.m. in New York.

The positive results come after Sea cut its full-year e-commerce revenue outlook for May, to a low of $8.5 billion from $8.9 billion previously. Shoppers who have emerged from the lockdown are cutting back on online purchases, turning to essentials during a potential downturn.

Sea, considered Tencent Holdings Ltd.’s biggest investor, has suffered a series of setbacks this year, including an abrupt ban on India’s most popular mobile game and the closure of stores. e-commerce activities there then. Its shares have fallen about 75% since peaking in October.

The company managed to increase profits when top growth reached its peak. Second-quarter revenue rose 29% to $2.9 billion, the slowest growth in nearly five years.

Sea Ltd Sales Growth Despite Ebitda Loss: Preview

Key insights

  • In Southeast Asia and Taiwan, the adjusted Ebitda loss per order for Shopee – before head office overhead allocation – is less than 1%. Forrest Li CEO confirmed the business goal is to achieve positive adjusted Ebitda before HQ costs in Asia this year

  • Sea’s net loss more than doubled to over $931 million in Q6

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

  • Garena games revenue fell to $900.3 million, slightly above the $827.6 million estimate, when the hit mobile game Free Fire launched. The company said in March it expected Garena to post between $2.9 billion and $3.1 billion in bookings by 2022, its first drop ever.

  • Revenue from SeaMoney, Sea’s digital financial services unit, grew to $279 million.

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  • Sea has been reducing its overseas footprint and cutting jobs in peripheral businesses as competition grows stiffer and as it focuses more on profits, a marked shift from the the former is spending on global expansion.

  • Shopee’s total merchandise value, the sum of transactions that run through its platform, increased 27% to $19 billion.

  • Some investors are reducing their exposure to Sea. Tiger Global Management LLC sold $473.8 million of Sea stock, cutting its holdings after six quarters of purchases, according to SEC filings. Altimeter Capital Management LP, a shareholder of Grab Holdings Ltd. based in Singapore, has left Sea’s Class A-ADRs, according to an analysis of filings by Bloomberg News.

(Update shared in second paragraph.)

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