Sea Ltd. Stock Plunges As Company Posts Surprise Loss

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SE stock fell more than 20% Tuesday after Sea Ltd. (SE) reported third quarter results showing an unexpected loss. The Singapore-based internet services company said it is investing more, as the firm faces off with e-commerce competitors.  

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For the quarter ended Sept. 30, Sea reported a loss of 26 cents per share on $3.31 billion in sales. On average, analysts polled by FactSet expected Sea to earn 12 cents per share on $3.17 billion in sales.

Compared to a year ago, Sea’s third-quarter results significantly narrowed a loss of $1.02 per share while sales climbed 5%. However, Sea had reported profits for the last three quarters when the company had focused on cost-cutting and finding efficiencies.

“In this current period, we will prioritize investing in the business to increase our market share and further strengthen our market leadership,” Chief Executive Forrest Li said in a news release Tuesday.

On the stock market today, American-listed SE stock fell 22% to 35.87. 

SE Stock: Growing Competition

Sea is one of the largest internet services providers in Southeast Asia, operating businesses in digital entertainment, e-commerce, and digital payments and financial services. Sea’s products include Shopee, an e-commerce platform that services Southeast Asia and Taiwan; SeaMoney, a digital payments and financial services provider and Garena, a global online games developer.

E-commerce sales grew 16% year over year to $2.2 billion. Digital entertainment revenue fell 34% to $592 million.

The e-commerce business provides about two-thirds of the firm’s revenues. But Shopee has faced growing competition from platforms such as TikTok, Shein and Temu, owned by PDD Holdings (PDD).

“The entrance of new players has intensified the competition in our market,” Li said on Sea’s earnings call Tuesday. “Competition may accelerate market share consolidation, and when markets stabilize, each remaining player will have sustainable profitability. Investing in market share gains now will position us better with even stronger market leadership when that happens.”

Rough Year For Sea

SE stock fell 29% following its second-quarter earnings report in August, when Li similarly said the company would ramp up investments.

Investors are wary of increased spending at a company that has a history of losses. Plus, the triple-digital sales growth the company recorded during the early pandemic quarters is unlikely to return.

Overall, SE stock has lost 31% of its value this year, including Tuesday’s slide.

SE stock ranks No. 13 out of 60 stocks in IBD’s Retail-Internet industry group, according to IBD Stock Checkup. It has a subpar IBD Composite Rating of 49 out of 99.

IBD’s Composite Rating combines fundamental and technical metrics for an overview of a stock’s strengths. The best-rated growth stocks have a Composite Rating of 90 or better.

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