To The Moon

• Shares of technology conglomerateSea Limited(SE) fell to double-digit losses on Tuesday.
• The Singapore-based company posted a far bigger adjusted earnings loss than analysts anticipated.
• Fears of a global recession undercut the otherwise relevant SE stock.

Recession fears don’t represent an exclusive domain of American investors, as Singapore-basedSea Limited(NYSE:SE) fell sharply amid rising pressures. The technology conglomerate posted itsfinancial results for the second quarter, notably producing an adjusted earnings loss below expectations. Sea joins other e-commerce firms attempting to navigate an ambiguous global economic outlook. SE stock dipped 10% before extending the red ink further in the afternoon session.

For the June quarter, Sea posted an adjusted loss before interest, taxes, depreciation and amortization (EBITDA) of $506.3 million. However, heading into Q2, covering analysts projected a loss of $482.3 million. In terms of net loss,Bloombergreported that the company doubled this particular crimson hue to over $931 million. On a positive note,total GAAP revenue was $2.9 billion, up 29% year-over-year.

However, few investors took any silver linings for SE stock seriously. Unfortunately, the glaring earnings miss occurred after management cut its full-year e-commerce revenue outlook in May. At the time, Sea adjusted sales expectations to a low of $8.5 billion versus $8.9 billion previously.

To be fair, Sea’s chairman and CEO Forrest Li characterized the Q2 results as a reflection of “continued progress in enhancing efficiency and strengthening” its ecosystem. Still, SE stock faces a number of fundamental headwinds that have worried investors.

SE Stock and the Heap of Troubles

Primarily, global economic woes impose substantial concerns over SE stock. PerBloomberg, “Shoppers emerging from pandemic lockdowns are cutting back on online purchases, shifting toward essentials during a potential recession.”

While the inflationary trend of the U.S. dollar obviously garners the most attention, Sea’s home nation hasn’t been immune. Indeed, anotherBloombergreport last month noted that Singapore’sinflation rate increased 4.4% in Junefrom a year ago. Therefore, the news agency stated that this dynamic bolsters the case for more tightening.

Another issue stems fromTencent(OTCMKTS:TCEHY). The Chinese multinational tech and entertainment conglomerate represents Sea’s biggest investor. However, Beijing’s crackdown on anticompetitive behavior may force Tencent to sell all or much ofits $24 billion stakein food delivery giantMeituan, perReuters.

Adding to the worrying narrative, Tencent last year disclosed plans to sell shares in investees such asJD.com(NASDAQ:JD) and SE stock.

Vey-Sern Ling, a managing director at Union Bancaire Privee, stated, “The real fundamental impact of such divestments are usually minimal because business relationships are retained, but there may be short-term pressure not just on Meituan’s share price but also on Tencent’s other investees across the tech industry in China and globally.”

If these pressures weren’t already enough for SE stock, Sea suffered a sudden ban of its most popular mobile game in India. Eventually, the company’s e-commerce operations closed in that country.

$Sea Ltd(SE)$