Sea CEO’s distress call will make tech waves

A person stands in front of a signage of Southeast Asian e-commerce and gaming group Sea Ltd’s, at their office in Singapore March 5, 2021. REUTERS/Edgar Su

HONG KONG, Sept 21 (Reuters Breakingviews) – Candour is often welcome during times of distress. Forrest Li, the chief executive of Singapore’s Sea (SE.N), is not mincing his words as he sounds the alarm at his $26 billion e-commerce to video-games outfit. In a Sept. 15 internal memo seen by Breakingviews, he candidly admits that Sea will not be able to raise external funds and lays out a plan to achieve “self-sufficiency”, or positive operating cash flow, within 12 to 18 months. Companies from Meta (META.O) to Alibaba (9988.HK) are emphasizing financial discipline amid a slowing global economy.

Sea’s message is eye-catching, nevertheless. In March, Li had defended the company’s strategy to spend on growth rather than focus on profitability to appease shareholders, according to Bloomberg. The shift in tone follows reports read more of massive job cuts, a retreat from Latin America as well as a 150% jump in second-quarter operating loss, to $837 million, from a year earlier. Since the beginning of the year, Sea’s New York stock has plunged nearly 75%.

Cash-burning peers in the region like Grab should take note. Losses are widening at the $11 billion super-app as it continues to invest in fintech read more. Sea’s distress signal is a wake-up call. (By Robyn Mak)

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Editing by Una Galani and Thomas Shum

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