Investors jump ship as Sea scraps Shopee guidance

Opening Bell 🔔 is Tech in Asia’s free newsletter that brings you the biggest news and latest trends around Asia’s publicly listed tech companies. [Read from your browser]( Opening Bell 🔔 Welcome to the Opening Bell! Delivered every Monday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and latest trends on Asia’s publicly listed tech companies. If you’re not a subscriber, get access by [registering here](. --------------------------------------------------------------- Hello {NAME} Uncertainty during tough macroeconomic times is perhaps the last thing a firm wants to show investors. However, Sea Group (SE, NYSE) whipped up a platter of it last week after [suspending its full-year revenue guidance for Shopee](. Sea had already lowered the revenue guidance of its ecommerce unit earlier this year, but it has now withdrew it altogether, citing “increasing macro uncertainties” as the cause and sending investors on a mad dash to the exits. The firm’s stock lost about a fifth of its value last week and currently trades at more than 80% below its peak of US$372.70 per share. The reaction from investors is understandable, given that it is unlikely that a company would rip up its guidance if there was internal confidence that its initial or revised forecast would be met or exceeded. Shopee generated only about 38% of its full-year revenue target in the first half of 2022. See also: [Org Chart: The people running Shopee]( But Sea’s decision to pull Shopee’s guidance, while notable, probably isn't as outlandish as people might think, considering the state of ecommerce around the world has been shaky. For instance, even Amazon (AMZN, NDAQ) and Alibaba (BABA, NDAQ) reported falling ecommerce sales in their latest quarterly reports. While Shopee does dominate in different countries compared to these industry titans, many of these markets are battling a similar macroeconomic woe: heightened inflation. It doesn’t help either that Garena, the Singapore-based firm’s digital entertainment unit, has seen falling sales. If you recall, the market sent Sea’s shares to the dryers after it reported [a sluggish 2022 booking guidance]( for Garena in March. Well, that forecast remains unchanged as it struggles to find an heir to its major cash cow, Free Fire. Read more: [Blockman Go could be Garena’s next big hit after Free Fire]( All this brings us to today’s Big Story, where *Tech in Asia* whips out its magic crystal ball and attempts to do what only a few brave souls would: making sense of the market’s reaction to Sea’s tepid results. Was the response overzealous, justified, or perhaps even too kind? In this week’s featured piece, my colleague Simon also breaks down the near- and long-term prospects of Sea’s three key pillars. He shines the spotlight on Shopee’s unit economics, decodes Garena’s mixed quarter, and stresses the need for patience at the group’s fastest growing segment, SeaMoney. -- Shravanth  --------------------------------------------------------------- THE BIG STORY [Was Sea’s 22% stock plunge after Q2 results an overreaction?]( Sea can’t seem to catch a break: Despite an improvement in market sentiment, its shares tumbled following its Q2 results. What are investors worried about?  Also, check out: [Sea Group’s financial health in 9 charts](  --------------------------------------------------------------- 3 TRENDS TO KEEP AN EYE ON Hot stocks, earnings reports, restructuring, pressure from activist investors, and more. 1️⃣ Teaming up to protect interests: It is a common occurrence for big players of the same industry to shake hands and form consortiums in order to not only project a unified front but also (when push comes to shove) have a stronger voice. This is especially true when regulation could impact the top and bottom lines of businesses in the sector. Earlier this year, Tech in Asia highlighted that the Indian Edtech Consortium, a self-regulatory body which includes top edtech players such as Byju’s, Unacademy, upGrad, Vedantu, and Simplilearn, [was formed in response to the increased threat]( of government regulation and oversight of the industry. Now, loss-making food delivery firms Deliveroo (ROO, LON), Grab (GRAB, NDAQ), and Foodpanda, a unit of Delivery Hero (DHER, ETR), have [jointly launched an association]( called the Digital Platforms Industry Association (DPIA). Similar to India’s edtech consortium, DPIA intends to launch an industry code of conduct for its members. The trio of food delivery companies said that the industry is an essential service, adding that the platforms bring convenience to their users. (There is nothing like a self pat on the back every now and then, is there?) Deep dive: [High inflation poses danger to Grab, Gojek, Foodpanda – and their merchants too]( 2️⃣ Even Tencent (0700, HKG) can’t outrun China’s slowdown: If you thought stagnating revenues at Alibaba were a one-off, company-specific event, kindly think again. Tencent, China’s most valuable firm, reported [its first-ever fall in revenue]( of about 3% last week amid the backdrop of the nation’s deepening slump. Both firms that have encapsulated China’s dizzying economic rise over the last decade by sustaining dazzling growth rates are now at a standstill as the world’s second-largest economy battles a property slump and as Covid-19 outbreaks cause impromptu lockdowns. Meanwhile, Tencent, which has cut around 5,000 jobs in the last quarter, is reportedly [planning to divest]( its massive stake in Meituan (3690, HKG). However, chief strategy officer James Mitchell labeled the news as [“not accurate”]( in a post-earnings call with analysts.  Visual story: [Tencent’s financial health in 5 charts](  3️⃣ Apple (AAPL, NDAQ) looks to South Asia to reduce reliance on China: The world’s most valuable company is looking to diversify its production lines away from China as the nation battles with supply chain snags caused by a devastating heatwave and disruptive ad hoc lockdowns. The iPhone maker is reportedly looking [to produce Apple Watches and MacBooks in Vietnam](. Its suppliers, Luxshare Precision Industry (002475, SHE) and Taiwan-based Foxconn (2354, TPE), have already started the test production of Apple Watches in northern Vietnam. The development comes after Apple moved some parts of its iPhone production to India. It is also looking to [shift iPad assembly]( to the country as well as in Vietnam.  --------------------------------------------------------------- 2 EYE-POPPING FACTS Tech in Asia scours the internet to bring you head-turning numbers from the world of business. - [32,000%]( - Hong Kong firm AMTD Digital (HKD, NYSE) soared so much since its debut last month that at one point it was valued more than Goldman Sachs (GS, NYSE) and JP Morgan (JPM, NYSE). However, the bubble burst, and the stock has since tumbled more than 90%. Now, the group behind this head-scratching IPO has drawn regulatory scrutiny over some of the deals it has arranged. - [50 million users]( - That’s the user base target that Allo Bank (BBHI, IDX) hopes to reach within the next three to five years. The lender hopes to grow its audience to 6 million to 10 million this year and is banking on a boost from integrating with the ecosystem of its largest shareholder, CT Corp, to reach the 50 million mark.  --------------------------------------------------------------- THE 1 YOU DIDN'T SEE COMING We spotlight the unusual, not-your-everyday kind of story that has got everyone talking and social media buzzing over the past week. The fate of Paytm’s CEO hangs in the balance, Elliot Management exits SoftBank, and Google creates soda-fetching robots The woes keep stacking up for Vijay Shekhar Sharma, CEO of Paytm and its parent firm One97 Communications (PAYT, NSE). After overseeing the [fintech giant’s lackluster public offering]( last year, he now faces a vote of confidence from investors who will decide whether he will continue at the helm of the company. Making matters even worse for the 44-year-old is that three proxy advisory firms, including Institutional Investor Advisory Services, recommended shareholders vote [against]( his reappointment as CEO and managing director. This week, SoftBank's (9984, TYO) Masayaoshi Son also lost a prominent backer. US investment firm Elliott Management [sold almost all]( its remaining shares in the Japanese conglomerate after previously investing as much as US$2.5 billion. Lastly, if you’ve ever felt exhausted after a work day, then Google (GOOGL, NDAQ) has got you [covered](. The tech giant plans to augment physical robots with the conversational skills of virtual chatbots to help its employees fetch soda and chips with ease. OK, Google. Maybe chill with the [AI stuff](  --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Not your cup of tea? You can unsubscribe from this newsletter by going to our preference center at the bottom of this email. Happy investing and see you next week! Disclaimer: This content is for informational purposes only. Kindly do not construe any such information as legal, tax, investment, financial, or other advice. [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. 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