Internet service company in Southeast Asia Sea Ltd. (SE) on Tuesday after reporting second-quarter revenue that missed analyst estimates. SE stock was down more than 29% at midday.
The Singapore-based company reported earnings of 54 cents per share for the quarter ended in June on revenue of $3.1 billion. However, analysts polled by FactSet expected sales of $3.26 billion.
In the year-ago period, Sea lost $1.67 per share on sales of $2.9 billion..
Sea is one of the largest Internet service providers in Southeast Asia, operating businesses in digital entertainment, e-commerce, digital payments and financial services. Products include Sea Shopee, an e-commerce platform serving Southeast Asia and Taiwan; SeaMoney, a digital payments and financial services provider, and Garena, a global online game developer.
SE stock plunges after earnings
For the largest share of Sea’s business, e-commerce, revenue was $2.1 billion for the quarter, up 20.6% year-over-year.
Sales from the company’s digital entertainment business were down about 41% compared to the same period last year, to $529 million.
Sea stocks fell 29.4% to 40.18 in the latest move. The company’s shares are down about 20% since the beginning of the year.
SE stock is weak IBD composite classification of 45, and even weaker a relative strength rating of 15.
Offshore shifts away from cutting cost
A cost-cutting overhaul the company began last year that included layoffs and reduced marketing spending brought Sea’s first quarterly profit in the final three months of 2022. But e-commerce spending slowed from what the pandemic company saw in 2021. Total sales hit triple-digit annual growth.
“In the past two quarters, we have not only achieved self-sufficiency, but also demonstrated the profitability of our model and our ability to manage rapid and significant shifts in operational focus as we see fit,” CEO Forrest Lee said on a conference call. With Analysts Tuesday.
He says the company will now ramp up its investment in growing its e-commerce business.
“Such investments will have an impact on our bottom line and may lead to losses for Shoppee and our group as a whole in certain periods,” Lee said.
SE stocks rank 18th out of 60 stocks in the online retail group, according to IBD stock check.
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