Sea slumps after India bans its popular gaming app

Singapore headquartered Sea. fell more than 18 percent on the New York Stock Exchange (NYSE) on Monday, wiping out more than $16 billion in the global consumer internet company’s market capitalisation. 

Sea’s market capitalisation fell to $71.6 billion on February 14, 2022, as compared to $87.8 billion on February 11. 

The slump followed India’s decision on Monday to ban 54 Chinese mobile applications due to security concerns, which also included Sea’s battle royale game Garena Free Fire. 

The list also includes apps like Tencent’s Xriver, Onmyoji chess, Beauty Camera among others. Previously, in June 2020, India had banned 59 apps of Chinese origin over data security and other concerns including TikTok, UC Browser. 

Even though Sea is Singapore-based company, the Chinese multinational technology and entertainment conglomerate Tencent Holdings Ltd. is Sea’s largest shareholder. 

Sea is the parent entity of the gaming developer Garena, which last reported 729 million active users in the quarter ended September 2021, growing 27 percent on a yearly basis. 

Free Fire is its most popular game. The company said during its earnings call that Free Fire was ranked second globally by average monthly active users for all mobile games on Google Play in the quarter, citing App Annie. 

“Free Fire also continued to be the highest grossing mobile game in Southeast Asia, Latin America and India. It has maintained this leading position in India for four consecutive quarters,” Sea’s CEO and founder Forrest Li said. 

Founded in 2009, Sea offers services in digital entertainment, e-commerce, digital payments and financial services. Since it listed on NYSE in 2017, the conglomerate’s shares have jumped close to 700 percent–almost eight times since its listing. 

It  is also the owner of ecommerce app Shopee, which is one of the most preferred ecommerce apps in South East Asia. 

Over the last few years, the company has been expanding into new growth markets in Asia. India–with its large population base and growing internet penetration –is one of its major target markets. 

Last year, it launched Shopee in the country. The decision to ban Free Fire also puts question on whether Shopee's growth in India.

In the last few months, the company’s share price has reflected investor concerns.  Sea’s shares have fallen about 55 percent in the last six months. 

In 2020, the company had reported a revenue of $4.3 billion. However the company net loss accounted for $1.6 billion during the year.