In this video, I will discuss Sea Limited's (SE 0.05%) recent quarter and the moves the company has made with regards to the European expansion and the India ban of Free Fire. You can find the video below but here are some highlights.
- On March 6, Sea's e-commerce arm Shopee will terminate its operations in France just a couple of months after entering the market. This move shows the company isn't afraid of trying new things and acting accordingly.
- India blocked Sea's popular gaming app Free Fire as part of a crackdown on 54 apps it believed were sending user data to servers in China. For those unfamiliar with Sea Limited, it is a Singaporean company. Singapore's ministry of trade and industry said that they hope this issue gets resolved quickly.
- The bad news didn't stop there because in its latest earnings report, although it grew Garena's user base year over year (YOY), that side of the business has been losing active and paying users quarter over quarter, and that's without the India ban.
- Shopee and Sea Money are still growing extremely fast but are still unprofitable, which is why it is important for investors to keep an eye on Garena's profitability.
- Total gross profits in Q4 grew 146% YOY, and for the full year grew 189% to $3.9 billion.
- Net loss increased to $616 million from $524 million in the prior-year quarter.
- The company expects the digital entertainment side of the business to grow 32% YOY to $3 billion at the midpoint, which indicates a slowdown. The e-commerce and digital financial services sides of the business are expected to grow 75% and 155% YOY, respectively.
Investors who are buying Sea Limited stock today are buying an unprofitable business but also one that is still growing very fast and adapting to the ever-changing environment.
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*Stock prices used were the closing prices of Mar 2, 2022. The video was published on Mar 3, 2022.
