Southeast Asia internet services firm Sea Ltd. crashed Tuesday to its lowest point since November 2022 after reporting second-quarter revenue short of analyst expectations. SE stock plunged nearly 29% on the day.
The Singapore-based company earned a profit of 54 cents per share for the quarter that ended in June on $3.1 billion in revenue. Analysts polled by FactSet, however, were expecting sales of $3.26 billion and earnings per share of 65 cents.
In the year-earlier period, Sea lost $1.67 per share on sales of $2.9 billion.
Sea stock plummeted 28.7% to close at 40.58. With Tuesday's tumble, shares now are down 22% year to date.
Sea Shifts Away From Cost-Cutting
Sea is one of the largest internet services providers in Southeast Asia, operating businesses in digital entertainment, e-commerce, and digital payments and financial services. Sea's products include Shopee, an e-commerce platform that services Southeast Asia and Taiwan; SeaMoney, a digital payments and financial services provider and Garena, a global online games developer.
A cost-cutting overhaul the company started last year that included layoffs and reduced marketing spending led to Sea's first quarterly profit in the final three months of 2022. But spending on e-commerce has slowed from the boost the company saw from the pandemic in 2021, when its total sales hit triple-digit annual growth.
"In the past couple of quarters, we have not only achieved self-sufficiency, but also demonstrated the profitability of our model and ability to manage fast and significant shifts in operational focus as we see fit," Chief Executive Forrest Li said on a call with analysts Tuesday.
He says the company will now ramp up investments in growing its e-commerce business.
"Such investments will have impact on our bottom line and may result in losses for Shoppee and our group as a whole in certain periods," Li said.
SE Stock: Low Ratings
For the largest share of Sea's business, e-commerce, revenue was $2.1 billion for the quarter, up 20.6% compared with the same period last year.
Sales from the company's digital entertainment business fell about 41% compared to the same period last year, to $529 million.
Shares hold a weak IBD Composite Rating of 45, and an even weaker Relative Strength Rating of 15.
SE stock ranks No. 18 among the 60 stocks in the retail-internet group, according to IBD Stock Checkup.
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