SINGAPORE, SINGAPORE – 2021: Large Shopee logo at the entrance to the e-commerce platform headquarters in the Science Park. (The exact date of the photo is unknown due to incorrect camera settings)

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Shares of Southeast Asia, an e-commerce and gaming company Sea Group, rose after its first-quarter earnings exceeded analysts’ expectations on Tuesday.

U.S.-quoted Sea shares rose 14 percent to $ 80.21 after the Singapore-based online firm reported earnings that exceeded analysts’ expectations in the first quarter of this year.

Here is how the company came from the New York Stock Exchange between January and March:

  • Income: $ 2.9 billion versus $ 2.76 billion, analysts expected, according to Refinitiv.
  • Net loss: According to Refinitiv, $ 580.1 billion versus $ 722 billion, analysts had expected.

Sea’s revenue was up 64.4% year-over-year, but down about 9.5% from the $ 3.2 billion it received in the previous quarter, indicating that after two years of sales caused pandemic, growth begins to reach the plateau.

This online shopping platform Shopee and gaming division Garena have grown slower as countries have opened up.

The company warned that inflation and supply chain disruptions could affect the business, even if it continues to bring losses.

“As we enter a new era, we recognize that current macroeconomic trends and uncertainties may affect our region and the world in the near future,” said Forrest Lee, CEO and co-founder of Sea, during the earnings call.

Both Shopee and Garena, two major Sea-earning units of the Sea, faced lower revenues compared to the previous quarter.

E-Commerce: Shopee

Shopee’s e-commerce revenue was $ 1.52 billion in the first quarter, compared with $ 1.59 billion in the previous quarter. High spending on logistics and marketing resulted in a loss of $ 810 million – $ 131 million less than in the previous quarter.

The company revised its Shopee revenue targets for the full year to $ 8.5-9.1 billion, citing “increased macro uncertainty.”

Sea CEO Yanjun Wang noted that the company is not lowering its recommendations, but expanding them as a precaution. His preliminary estimates ranged from $ 8.9 billion to $ 9.1 billion.

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But the amount people spend on each order may decrease, says Christine Lau, an analyst at research firm Third Bridge.

“Inflation affects discretionary spending,” she said, referring to non-essential items such as entertainment and luxury items.

“For a lot of high-frequency items or just essentials that people had to buy online – either they weren’t available offline, or it was just wiser to use Shopee when everything was closed – I think a lot of that would be redistributed to autonomous retail, ”Love added.

Game: Garena

Garen, who has long been profitable Sea, posted sales of $ 1.1 billion. The gaming industry’s net profit was up 52.2% (or $ 432 million) from the same period last year, but down 23.5% (or $ 859 million) from the previous quarter.

The quarterly number of active users decreased by 32.9 million compared to the same period last year, and the number of quarterly users decreased by more than 18 million to 61.4 million from 79.8 million years ago, in line with concerns that demand for mobile The game is now declining in the world after the pandemic.

Most of the losses may be due to the ban in India. Earlier this year, India blocked the hit mobile game Garena Free Fire, as well as 53 other programs with links to China.

Chinese technology giant Tencent is a major shareholder of Sea. In January, Tencent sold Sea shares for $ 3 billion, reducing its stake from 21.3% to 18.7%.

Technology sales

Sea shares have suffered from a wider sell-off of technology. Its shares fell more than 80% from a high in October 2021, when it reached $ 366.99. Prices fell to a two-year low of about $ 57 earlier this month.

Investors are also concerned that its money-burning model has spent hundreds of millions, even billions of dollars a quarter on marketing, especially on subsidies to attract consumers and retailers at Shopee, which competes with Amazon, Alibaba Lazada in Southeast Asia. , and Mercado Libre in Latin America.

Shopee is present in 13 countries and is located in Southeast Asia, Latin America and Europe. He withdrew his Shopee business from India and France in March this year, just months after entering the two countries.

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