What happened
A stock in the beleaguered tech sector, Sea Limited (SE 2.03%) had an awful Thursday. Disquieting news about the state of the company, plus a bearish analyst note, combined to drive the share price down by more than 4% on the day -- a far worse showing than the 1.5% slide of the S&P 500 index.
So what
That morning, well before market open, Bloomberg reported that Sea is freezing salaries for the bulk of its workforce and trimming bonuses. The financial news agency, citing an internal company memo authored by CEO Forrest Li, said these moves are aimed at bolstering profitability following a challenging 2022.
This year has seen more setbacks than victories for the Singapore-based mobile gaming and e-commerce company. It booked a series of bottom-line losses, made fairly deep cuts in its employee rolls, and discontinued operations outside of its core Asia-Pacific market.
Bloomberg quoted Li as writing in the memo that "These are temporary but necessary measures to help us build toward a bigger, brighter future."
With that same hopeful tone, he also wrote that "I want to assure you we will be starting 2023 on stable footing. Most of the big changes we need to make are complete."
Meanwhile, later on Tuesday, Cowen analyst John Blackledge downgraded a set of well-known stocks from outperform (buy, in other words) to market perform (hold). One of the downgraded titles was Sea, which Blackledge said was burdened by "elevated" losses at the company's e-commerce (Shopee) and fintech (Sea Money) units. The prognosticator also cut his price target on the stock to $60 per share from his previous $72.
Now what
Many investors are deeply skeptical about the prospects of the broader tech sector, and news like this will only exacerbate the mood. While Sea stock still has many believers, for the most part the market -- not to mention the occasional analyst -- is understandably losing patience with that lengthening streak of bottom-line deficits.
