Shares of Singapore-based e-commerce, payments, and online gaming company Sea Limited (SE -0.25%) took a tumble this morning, and are down 9.7% as of 10:15 a.m. ET.
You can blame Tencent Holdings (TCEHY -0.40%) for that.
According to data from S&P Global Market Intelligence, Tencent Holdings is currently the top owner of Sea Limited stock, controlling 21.4% of the company's shares. Make that 18.8% -- because Tencent just liquidated a big slug of Sea Limited stock.
As Bloomberg reported this morning, Tencent was seeking to sell 14.5 million shares of Sea Limited stock -- 2.6% of all shares outstanding -- asking a price between $208 and $212. No sooner had that news come out, though, than TheFly.com reported that the sale had gone through, with all 14.5 million shares selling at the bottom of that price range: $208 per share.
Suffice it to say that investors were disturbed by this news. The $208-per-share price was already nearly 7% below the market value of Sea Limited stock at yesterday's close, suggesting that one of Sea Limited's biggest shareholders didn't think the stock was worth what it sold it for. That implication probably explains why, now that the news has broken, the stock is continuing to fall below the price Tencent got for its stake.
That being said, I don't think panic is necessarily the right way to react to this news.
Why not? Consider that even after this sale Tencent is still hanging onto a sizable stake in Sea Limited -- the aforementioned 18.8%. What's more, Bloomberg reports that "Tencent has agreed not to sell further Sea shares for the next six months" -- so the risk of further sales further depressing the stock price seems limited.