What happened
Sea Limited (SE 2.03%) stock wasn't exactly a big gainer on Tuesday, but in contrast to numerous recent trading sessions, it managed to eke out a 0.7% gain over the course of the day. Investors, it seemed, were cautiously optimistic about the company's pull-back from a big market in its backyard.
So what
Singapore-based Sea announced that it would be ceasing the operations of its e-commerce unit Shopee in India. The company isn't wasting any time with the move; it said it will begin the withdrawal tomorrow (Wednesday, March 29).
Image source: Getty Images.
Reuters quoted a company statement indicating that the withdrawal is being made "in view of global market uncertainties." Shopee also pledged to make "the process as smooth as possible."
This is the second time in a month that Sea has halted Shopee operations in big markets abroad. It recently withdrew from France as well.
Sea has had a difficult and challenging March. At the start of the month, it reported fourth-quarter results that revealed a net loss far deeper than analysts expected. Since then, many analysts have grown more bearish on the stock.
Now what
That view might be changing, however. Several analysts weighed in positively on Sea's decision to pull Shopee from the Indian market. One was Morgan Stanley's Mark Goodridge, who believes that the company is being prudent by withdrawing from a challenging market, and the move will help limit Shopee's losses.
UBS prognosticator Navin Killa also considers the pull-out to be a plus for Sea, as it shows the company is realizing its goal of a "more calibrated" approach to international markets. Killa added that, in addition, "it removes the potential of high cash burn from competing with an ultra-competitive Indian e-commerce market with global and local giants such as Amazon, Flipkart, and JioMart."
