What happened

Shares of Sea Limited (SE -2.76%) dropped dramatically early Tuesday, cratering as much as 15.2%. As of 12:30 p.m. ET, the stock was down 14.2%.

The catalyst that sent the tech giant lower was a disappointing earnings report Tuesday morning that signaled choppy waters ahead.

So what

Sea Limited reported second-quarter revenue of $2.9 billion, up 29% year over year, resulting in gross profit that climbed 17%. Unfortunately, slowing revenue growth led to ballooning losses. On a GAAP basis, its net loss of $931 million more than doubled from the year-ago period, resulting in an adjusted loss per share of $0.61. 

Analysts had been expecting revenue of $3 billion and an adjusted loss per share of $1.14. 

Driving revenue higher were e-commerce sales on the company's Shopee platform of $1.7 billion, up 51% year over year, while gross merchandise volume (GMV) -- the value of products sold on its website -- climbed to $19 billion, up 27%. At the same time, the number of orders jumped to 2 billion, up 42%.

Things weren't nearly as rosy at Sea Limited's digital entertainment segment, led by the company's flagship Free Fire video game. Revenue of $900 million slumped 10% year over year, far removed from its triple-digit gains of last year. 

There was even worse news lurking beneath the surface. Bookings represent products and services that have been paid for but not yet booked as revenue, providing keen insight into future quarters. And investors did not like what they saw. Sea Limited's bookings of $717 million slumped 40% year-over-year. For comparison, bookings in the prior-year quarter were up 65%. 

Now what

There is potentially worse news ahead. In the face of a challenging macro-economic environment, management noted a shift to "focus on efficiency and optimization for [its] long-term strength and profitability." As the result of this shift, Sea Limited suspended its previously issued revenue guidance. 

Given the ongoing dramatic slowdown in the company's cash cow gaming segment -- which acts as the flywheel for its e-commerce and digital payments business -- investors might want to wait to buy Sea Limited stock, at least until there's more clarity on the growth front.