Forrest Li, chairman and group CEO of Sea Ltd.
Two billionaire cofounders of Singapore-based Sea Ltd. saw their estimated net worths slump by $995 million overnight after the New York-listed internet giant swung to a loss in the third quarter amid intensifying competition in the Southeast Asian e-commerce market.
Sea’s shares fell 22% Tuesday, wiping out roughly $643 million off chairman and CEO Forrest Li’s fortune and bringing his net worth to $2.2 billion, according to Forbes’ real-time billionaire tracker. The share price drop also erased around $352 million from COO Gang Ye’s fortune, bringing his net worth to $1.7 billion. Li, Ye and former billionaire David Chen founded Sea in 2009.
Sea reported third-quarter revenue of $3.3 billion, a year-over-year increase of 4.9%, but posted a net loss of $144 million, returning to the red after three consecutive quarters of profits. Revenue from its e-commerce business Shopee, which contributes about two-thirds of the company’s top line, increased by 16.2% year-over-year to $2.2 billion, its slowest growth rate to date.
“The entrance of new players has intensified competition in our markets,” Li said in an earnings call. “Competition may accelerate market share consolidation, and when markets stabilize, each remaining player will have sustainable profitability.”
Sea’s cash-cow gaming unit, which helped fund the company’s expansion in e-commerce and digital financial services, saw its revenue fall by 33.7% year-over-year to $592 million, while Sea’s nascent digital financial services arm saw its revenue rise by 36.5% year-over-year to $446 million.
Shopee has faced ongoing competition from rivals like Alibaba’s Lazada and ByteDance’s TikTok. An emerging opponent is Temu, the online marketplace arm of billionaire Colin Huang’s Chinese e-commerce giant PDD, which launched in the Philippines in August. In last quarter’s earnings call, Li said Sea would bolster its e-commerce investments even though doing so “may result in losses for Shopee and our group as a whole in certain period,” marking a shift from the group’s focus on improving profitability.
E-commerce across Southeast Asia is set to reach $139 billion in gross merchandise value (GMV) this year, up 6% from the year before, according to a report jointly prepared by Google, Temasek and Bain. With GMV expected to increase by 16% to reach $186 billion by 2025, the report said market leaders “have expressed willingness to begin re-investing profits to defend their market share,” as new entrants “have grown rapidly, gaining market share at an incredible rate,” without naming specific companies.
“Competition remains intense and dynamic, we caution that if the aggressive spend pattern persists longer, it could further drag on profitability timing of Shopee,” wrote Citi analyst Alicia Yap in a research note.
At one point in 2021, Sea was the world’s best-performing stock during the height of the Covid-19 pandemic. That year, Sea expanded its fintech ventures through its payments division SeaMoney, including launching a digital bank in Indonesia. In the pandemic’s aftermath and hiking interest rates, Sea’s market cap has fallen nearly 90% from its all-time high.
Li was ranked No. 18 on the list of Singapore’s 50 Richest that was published in September, with a net worth of $2.4 billion at the time, while Ye was ranked No. 25, with a net worth of $1.8 billion. Sea’s declining share price pushed Chen off Forbes’ billionaire ranks in 2022.