Sea Limited. sees a rise in its stocks and reveals that they have been focusing on this particular factor.
The tech conglomerate Sea Limited is known as a holding company for Garena, SeaMoney, and Shopee, according to their official site. Additionally, they also own the Singapore Premier League football club, Lion City Sailors FC.
Sea Limited, together with its subsidiaries, engages in the digital entertainment, e-commerce, and digital financial service businesses in Southeast Asia, Latin America, the rest of Asia, and internationally.
Following the most recent Earnings report, investors now have better visibility of Sea Limited's future profitability, and here's why.
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How Sea Limited Stocks Rose up to 41% By Focusing on Profitability
Initially, slowing growth sent Sea's stocks down over 70% year to date, causing the company to even lay off more than 7,000 employees in their workforce this year. However, an unexpected shift improved margins that were able to turn the company's stocks around.
CNBC reports that shares of Sea Limited jumped as much as 41% following the announcement of its third-quarter financial results. Due to this score, Sea has a high chance of showing progress, with gross profit up 22% year over year, growing faster than revenue.
Following the development, Chairman and Group CEO of Sea Limited Forrest Li attributed the company's growing shares by revealing that they had focused on profitability instead of outright, blistering growth, according to Head Topics.
"Given the significant uncertainties in the macro environment, we have entirely shifted our mindset and focus from growth to achieving self-sufficiency and profitability as soon as possible, without relying on any external funding," said Forrest Li.
Sea's E-commerce Thrives While Gaming Plummets
The company's two main money-making divisions are the online shopping platform Shopee and the gaming arm Garena.
Sea's Garena digital entertainment offers a platform for Southeast Asian users to access mobile and PC online games, as well as promoting eSports operations such as live streaming and online forums.
Meanwhile, their e-commerce side, Shopee, is a digital marketplace that provides logistics infrastructure and seller services to Southeast Asian countries like the Philippines, Taiwan, Thailand, Singapore, Malaysia, Indonesia, and Vietnam.
Due to the unexpected growth, Sea now expects its Shopee marketplace to reach breakeven on adjusted earnings before interest, taxes, depreciation, and amortization basis by the end of 2023.
However, CNBC reveals that while Sea's e-commerce sees increased revenue, their gaming arm dips after a reportedly "disappointing" gaming sales performance.
"We are currently working towards adjusted EBITDA breakeven for Shopee overall by the end of 2023," said Sea CEO Li.
Sea's digital entertainment business has been seeing weaker revenue, causing them to lower their guidance for the segments like Garena from $300 million to between $2.6 billion to $2.8 billion for the full year, according to The Motley Fool.
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Written by Andi C.
