What Happened:
Shares of e-commerce and gaming company Sea (NYSE:SE) fell 12.3% in the morning session after the company reported third quarter results marked by a decline in its user base, which fell below Wall Street's expectations. The company stated that they will "prioritize investing in the business to increase our market share and further strengthen our market leadership", which is having a negative impact on profits. As a result, adjusted EBITDA missed by a large amount. On the other hand, It was great to see Sea beat analysts' revenue expectations this quarter. That stood out as a positive in these results. Overall, the results could have been better.
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What is the market telling us:
Sea's shares are very volatile and over the last year have had moves greater than 5%. But moves this big are very rare even for Sea and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was about 2 months ago, when the company gained 14.1% on the news that the Jakarta Post reported that Indonesia's government plans to introduce regulations governing the use of social media for e-commerce. The move comes in response to concerns about predatory pricing by e-commerce sellers. The report noted that some officials specifically highlighted TikTok, which could be regarded as a competitor to Sea. Sea operates Shopee (an e-commerce platform ) in Southeast Asia, including Indonesia.
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