Sea sheds $10.4b in market value after Q4 results

Sea Group, one of Southeast Asia’s most valuable companies, dropped its market value by US$10.4 billion after the company posted its quarterly results. The firm has so far trimmed US$127 billion in market value from its peak last November .

The decline in market value comes after Sea cut its year-on-year booking guidance for its digital entertainment unit Garena for the first time, dragging down the company’s shares in US trading by 13%. Sea’s current market value stands at US$70.6 billion.

Photo credit: Tech in Asia

For the full year of 2022, Sea expects bookings for Garena to come in at between US$2.9 billion and US$3.1 billion. In comparison, the estimate for 2021 was between US$4.3 billion and US$4.5 billion.

Quarterly paying users of its gaming business also dropped sharply to 77.2 million from 93.2 million in Q3 2021.

The company cited “unanticipated government actions” in India as one of the reasons for the decline in its digital entertainment unit forecast. Sea’s flagship game Free Fire is currently unavailable in the Google Play and iOS app stores in India after the government banned it along with other apps.

“With many economies reopening further in the fourth quarter and into this year, we have observed some moderation in online activities and the fluctuation in user engagement,” group CEO Forrest Li said on a conference call on Tuesday night.

See also: Sea Group’s financial health in 9 charts

Investment banking firm Jefferies said the grimmer outlook was a surprise to investors and that Garena will expand its portfolio and diversify its game genres in 2022 and beyond to prepare for the long run. The brokerage firm lowered its price target for Sea to US$197 from US$251, while maintaining a buy rating.

However, Sea remains “highly confident” in the long-term prospects for its digital entertainment business. “We remain committed to investing in content in Free Fire to enhance user experience and uplift user engagement,” Li added.