Sea Ltd tried to soothe and reassure its investors by forecasting growth in e-commerce revenue after losing half of its market capitalization in just a few months. The Singapore-based company expects the revenue to grow unabated as it expands in the Latin American market.
Sea Ltd expects its main business of e-commerce sales to increase to $8.9 billion to $9.1 billion in 2022 from 2021 sales of $5.1 billion. Digital entertainment bookings from digital entertainment would be $3.1 billion, a drop from 2021. In the fourth quarter, the company’s revenue doubled to $3.22 billion. The company faced a higher net loss of $617.6 million, up from $523.6 million, because it spent on new geographies to gain more market share
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Sea wants to consolidate its early success in Brazil, where it had launched its eCommerce business in 2019. It faces tough competition from Mercado Libre Inc., the Latin American e-commerce giant. On the other side, Shoppe, the online shopping arm of Sea in France, is pulling out after only a few months of maiden launch in the European market.
In 2021 during the pandemic, Sea’s e-commerce business surged with more than doubling sales as people shopped online. In 2017 it went public and became Southeast Asia’s most valuable company. Last week it surrendered that position for a short period after a broader tech stock sell-off with concerns about India’s abrupt banning of their popular gaming app Free Fire.
Its gross merchandise value rose by 77% to $62.5 billion across its e-commerce platforms last year.
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The forecast by the company on its digital entertainment bookings is between $2.8 bn. to $3.1 bn. with assumptions that economies will open after the pandemic. This is below last year’s bookings of $4.6 bn. Other headwind factors have been the unwarranted Indian government abrupt action taken into consideration.
Sea has given a projection for its financial services company, SeaMoney, expecting the revenue between $1.1 bn. to $1.3 bn. for the current fiscal. The fourth-quarter revenue of Shopee, its e-commerce unit, rose to $1.6 billion, up by 89%. The revenue of Garena, its digital entertainment unit, doubled to $1.4 billion. Sales and marketing expenses climbed by 83% to $1.2 billion.
The company’s forecast led to market reaction when its shares rose by 5.9% on Monday in New York. Since it achieved a peak in October, it has lost nearly 60% of its value.
