Why Did Sea Limited Stock Plummet by Over 18% Yesterday?
Sea Limited saw its share price take a significant hit yesterday following a massive and sudden ban of a number of Chinese apps in India.
Feb. 15, 2022

Consumer internet company Sea Limited (NYSE: SE) saw its stock fall by more than 18% yesterday. The firm, which operates in digital entertainment, e-commerce, and the digital payments industry, fell victim to a wholesale clampdown by the Indian Ministry of Electronics and Information Technology on over 50 China-based apps.

What happened to Sea Limited?

India, the world's second most heavily populated country, decided to outright ban a whole host of apps originating from China, citing security concerns as the reason behind the crackdown. Among these apps was 'Free Fire,' Sea Limited's most popular title. Sea has close ties to Chinese conglomerate Tencent, which owns approximately 19% of its stock. As such, despite Sea being based out of Singapore, it got caught in the crossfire.

'Free Fire' was the highest-grossing mobile game in India in the third quarter of 2021, and with a population of over 1.4 billion people, that represents quite a significant market for Sea. As concerns grew over Sea's ability to do business in India, investors sold off quickly, sending Sea's shares plummeting.

Why does this matter to investors?

While every sudden drop in share price isn't always a cause for concern, they are all causes for investigation. In this case, we have to figure out just how much this news truly affects Sea Limited's ability to continue to grow. And, while getting locked out of one of the world's largest markets is certainly nothing to be celebrated, it's also not as big a deal as it seems.

Despite showing rapid growth in India, the country only accounted for 2.6% of Sea's mobile gaming revenue during 2021. When we take into account that Sea also possesses e-commerce brands such as Shopee, and a swelling financial services arm, this number shrinks to 1.2% of its total revenue for the year.

Sea is continuing to expand in other markets, with a concerted focus on expansion into South America and Europe paying rich dividends. Despite significant competition across all sectors and headwinds such as this app ban in India, the company looks set to continue to prosper and offer value to investors long-term.


Top Ten Stocks To Buy Now
Commit to your future wealth today and join 1000s of subscribers receiving:
  • New stock picked every week out of 60,000 worldwide
  • Ten Foundational stocks to hold until 2034
  • A library of 60 stocks with analysis
  • 10 year Track record of performance
By submitting your email address, you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Policy and Terms of Use.

The Home of Successful Investing.

© 2024 MyWallSt Ltd. All rights reserved.

Services

Content

Social

Company

Support

Resources

This website is operated by MyWallSt Ltd (“MyWallSt”). MyWallSt is a publisher and a technology platform, not a registered broker-dealer or registered investment adviser, and does not provide investment advice. All information provided by MyWallSt Limited is of a general nature for information and education purposes, and you should not construe any such information as investment advice. MyWallSt Limited does not take your specific needs, investment objectives or financial situation into consideration, and any investments mentioned may not be suitable for you. You should always carry out your own independent verification of facts and data before making any investment decisions, as we cannot guarantee the accuracy or completeness of any information we publish and any opinions that we publish may be wrong and may change at any time without notice. If you are unsure of any investment decision you should seek a professional financial advisor. MyWallSt Limited is not a registered investment adviser and we do not provide regulated investment advice or recommendations. MyWallSt Limited is not regulated by the Central Bank of Ireland. MyWallSt Limited may provide hyperlinks to web sites operated by third parties. Your use of third party web sites and content, including without limitation, your use of any information, data, advertising, products, or other materials on or available through such web sites, is at your own risk and is subject to the third parties' terms of use.