Billionaire Trio Behind Singapore’s Sea Ltd See Fortunes Tumble After Earnings Disappoint

Forrest Li, cofounder and chairman of Sea Ltd.

Wei Leng Tay/Bloomberg

The three cofounders of Sea Ltd. saw their collective net worth tumble $1.9 billion on Tuesday after the Southeast Asian internet giant said its online gaming business would likely face headwinds this year.

Shares of Sea plunged 13% in U.S. trading, wiping out roughly $1.1 billion of Forrest Li’s fortune. The chairman of the Singapore-headquartered company is now worth $6.9 billion on Forbes’ Real-Time Billionaires List, making him the sixth-richest person in the city-state.

The stock drop also erased roughly $685 million of Gang Ye’s wealth, bringing the chief operating officer’s net worth down to $4.4 billion. While David Chen, the chief product officer of Sea’s e-commerce business, saw his fortune drop by $207 million to $1.3 billion. 

Sea said it collected nearly $10 billion in revenue last year, more than double the figure it reported for 2020, but its net loss widened to $2 billion from $1.6 billion during the same period, according to its earnings report released on Tuesday.

Sea expects its e-commerce business, the company’s largest source of revenue, to continue growing in 2022. Sea’s online shopping platform Shopee will likely pull in up to $9.1 billion this year, a 78% increase from 2021, while its digital payments service SeaMoney is expected to jump up to 177% to $1.3 billion during the same period, the firm said. 

The weakness in Sea’s outlook is focused mainly on its online gaming business, Garena. The unit’s bookings are expected to fall, for the first time, between $2.9 and $3.1 billion, compared to the $4.6 billion it earned in 2021. The reason given for the drop was “moderation in online activities and fluctuations in user engagement” as countries open up their economies. 

The company also said that its flagship mobile gaming title, Free Fire, was removed from India’s iOS and Google Play stores due to “unanticipated government actions.” Sea, which counts Chinese internet behemoth Tencent as its biggest investor, is facing challenges in India as tensions between Beijing and New Delhi remain high following a prolonged border dispute. Free Fire was reportedly among the 54 applications, mostly of Chinese origin, banned by the Indian government over security concerns in mid-February.

“While there are some headwinds impacting our digital entertainment business in the near term, we continue to remain extremely focused on developing Garena’s global platform, which we see as a key strategic asset in the long run,” Li said in the company's statement.

Sea's mobile gaming title, Free Fire, was removed from India’s iOS and Google Play stores.

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Sea has been listed on the New York Stock Exchange since 2017, when it raised $844 million through its initial public offering. The company’s stock soared to an all-time high of $366.99 a share in October as the pandemic boosted demand for its online gaming, e-commerce and digital payments businesses.

Since then, however, Sea’s shares have dropped 65.5% due to a confluence of factors—Tencent reduced its stake, the company faced operational uncertainty in India and its net loss widened.

In the fourth quarter of 2021, Sea reported a net loss of more than $616 million, up from $525 million from a year ago. Its revenue jumped 106% year-on-year to $3.2 billion for the three months ended December.

Sea’s e-commerce arm Shopee said its French shopping site will be shut down on March 6, just five months after it was launched. The business unit will instead continue to focus on markets in Southeast Asia, Taiwan and Brazil.