Garena woes knock $127b off Sea Ltd’s market value

garena free fire sea ltd
Image by Sharaf Maksumov | Bigstockphoto

Sea Ltd, one of Southeast Asia’s biggest unicorns, reported a net loss of $10.4 billion in Q42021, and a $127 billion drop in total market value since the company’s November peak. DealStreetAsia reports that while Sea beat analyst estimates, investor concerns are plaguing the company’s lucrative digital entertainment unit, Garena.

Garena accounts for almost 40% of Sea’s revenue, and a first-time cut in YoY booking guidance for the unit has dragged down Sea’s shares in US trading by 13%.

For the year 2022, Sea forecasts Garena bookings ranging from $2.9 billion to $3.1 billion throughout the year. In 2021, the forecast was between $4.3 billion and $4.5 billion.

Furthermore, the proportion of monthly paying customers in its gaming business fell to 77.2 million, from 93.2 million in Q3 2021.

According to the company, this is partly due to the Indian government banning Free Fire, Sea’s flagship game which is currently unavailable on Google Play and iOS app stores in the country.

“The bulls believe Garena will keep growing as it refreshes Free Fire and launches new video games. But in 2022, Sea expects Garena’s bookings to decline 33%-37%, compared to its 44% growth in 2021,” said Leo Sun of Motley Fool.

While the company expects “headwinds” to impact its gaming business, co-founder and CEO Forrester Li said that the e-commerce and financial services arms have been strong, despite a recent decision by Tencent to trim its stake in Shopee.

In Q42021, Shopee expanded at a tremendous rate, with the platform’s gross merchandise volume (GMV) increasing by 53% to $18.2 billion and gross orders growing by 90% to 2.0 billion.

In Southeast Asia, the three-way dogfight between super apps features Grab and GoTo (which owns GoJek) as well as Sea. To compete with Grab and GoTo’s transportation services, Sea recently teamed up with Blue Bird taxi to offer taxi ordering services.

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