The stock market got off to a good start to 2022 on Monday, and Tuesday morning's premarket trading action made it seem as though an encore might be on the way. As of 8 a.m. ET, Dow Jones Industrial Average (^DJI 0.03%) futures were up 97 points to 36,552. S&P 500 (^GSPC 0.23%) futures had gained 11 points to 4,797, while Nasdaq Composite (^IXIC) futures had risen 19 points to 16,504.
However, just because Wall Street is in a good mood doesn't mean that every single stock in the market will go up. Indeed, a couple of industry leaders were making sizable moves to the downside in premarket trading on Tuesday morning. Let's take a closer look to see why Sea Limited (SE 4.57%) and Warner Music Group (WMG 1.03%) found themselves on their back feet to start Tuesday's session.
A vote of less confidence
Shares of Sea Limited fell almost 7% on Tuesday morning. The move came after a key shareholder made a decision that seemed to signal a reduction in conviction about the Singapore-based e-commerce leader's future.
Sea announced that Tencent Holdings (TCEHY 0.56%) and Sea founder Forrest Li had agreed to terminate their proxy agreement, with Tencent choosing to convert all of its holdings of special Class B super-voting shares to ordinary Class A shares. The move will result in the reduction of Tencent's voting power in Sea to below the 10% mark, and it will also leave Li as the sole holder of Class B shares going forward.
In conjunction with the move, Sea intends to propose giving Li's Class B shares 15 votes per share rather than the current three. The company intends to hold its annual shareholder meeting in mid-February to approve the move, which would effectively give the founder commanding voting control over Sea.
Sea's stock has performed poorly in recent months, as investors have questioned the growth prospects of stocks across the market. That makes now a somewhat inopportune time for Tencent to make this move, but those who have confidence in Li's leadership should be pleased to see him consolidate his control over the company he founded.
When the music stops
Elsewhere, shares of Warner Music Group were down more than 4% in Tuesday's premarket session. The music industry giant had to deal with its majority shareholder selling a portion of its stock position, but investors are hopeful that the downward move will only be temporary.
Warner announced that it had priced a secondary offering of roughly 8.56 million shares at $41 per share, generating about $351 million in proceeds. The selling shareholder was Access Industries, an industrial group run by billionaire investor and philanthropist Len Blavatnik.
Ordinarily, a large sale like this would seem to raise questions about the shareholder's confidence in the company. However, Access holds a huge 73% position in Warner Music Group's shares. As large as the sale was, it represented less than 3% of those holdings, leaving Access with about 367 million shares worth well over $15 billion.
Warner just went public in the summer of 2020, and the offering came at a time when the music industry leader sought to move forward to capitalize on the impact of technological innovation by embracing streaming music and digital distribution. Access is now reaping some of the rewards of its investment, but Warner shareholders can expect Blavatnik and his company to remain involved well into the future.