Losing more than 900 million USD/quarter, Shopee makes the parent corporation struggle
Southeast Asia’s leading digital technology group Sea expects “favorable factors” for its business in 2022 following rapid expansion during the Covid-19 pandemic, Nikkei reported. .
The Singapore company, which operates various digital services from online games to e-commerce and e-payments, reported $9.95 billion in revenue for 2021, more than double the previous year. , while the net loss increased to $2.04 billion, from $1.61 billion.
Although Sea has posted the highest growth rates across all of its businesses in recent quarters, executives note that the environment is changing.
“With more economies reopening in the fourth quarter and into this year, we’ve seen moderation in online activities and fluctuations in user engagement,” said Mr. President and CEO Forrest Li spoke about the results, referring to Sea’s profitable gaming business.
Powered by investor appetite, the company raised about $7 billion through a stock offering in September aimed at expanding e-commerce outside of Southeast Asia. such as in Latin America, Europe.
But with losses mounting, the company’s shares have fallen to less than half of their October peak amid a sell-off in tech stocks due to changes in global monetary policy.
In its financial statement released earlier this month, Sea reported a net loss of $617 million for the fourth quarter of 2021, up from $523 million in the period a year ago. This shows that improving profitability remains a key challenge for the fast-growing startup.
E-commerce unit Shopee’s operating loss amounted to $941 million in the fourth quarter. In total, in 2021, Shopee processed 6.1 billion orders globally, up 90% from the previous year. However, this business segment also caused Sea to suffer a loss of up to $2.7 billion. Meanwhile, in digital entertainment, Sea reported a profit of $2.5 billion in fiscal year 2021, up sharply from a profit of more than $1 billion in 2021.
It is worth mentioning that, although losses continue to expand, Sea is still confident with the e-commerce segment.
The company expects e-commerce revenue to total about $9 billion in 2022, up from $5.1 billion in 2021. Li said the company expects its e-commerce business to “hit the mark.” positively adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)”.
Meanwhile, the company is also reallocating resources during its global expansion. Earlier this month, Sea announced it would be shutting down its e-commerce operations in France, just five months after its October launch. France was one of the first European markets it entered, along with Ba. Lan and Spain.
Yesterday, the company also announced that it is shutting down its e-commerce business in the Indian market of 1.3 billion people.
With Shopee’s current new markets, experts say it’s still in its infancy. However, they can grow if the company can replicate its penetration strategy, such as free shipping and other aggressive campaigns that the company has implemented in existing markets. In fact, the Brazilian business is fast-growing, bringing in 18% of Sea’s total revenue last year, including other businesses, in Latin America, up from 13% in 2019.
Sea started out as an online game company. In 2015, they launched an e-commerce platform in six Southeast Asian countries.
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