Want to know why $SE is down 25% today?
It's actually simpler than you think...⤵️
It's actually simpler than you think...⤵️
Three years ago, $SE had a GOLDEN opportunity.
E-Commerce was a nascent business for $SE, but the pandemic made it ENORMOUSLY important.
$SE's Shopee (think Amazon) saw orders and GMV more than double.
It had a leading position in SE Asia
E-Commerce was a nascent business for $SE, but the pandemic made it ENORMOUSLY important.
$SE's Shopee (think Amazon) saw orders and GMV more than double.
It had a leading position in SE Asia
The company had secondary offering 2021 bringing cash to $10B +
*IF* it had spent that cash on a SE Asia Fulfillment network, it would have secured its future.
🛑FULL STOP
But it didn't do that
It pursued low-quality growth in Europe, France -- even the US
Terrible decision!
*IF* it had spent that cash on a SE Asia Fulfillment network, it would have secured its future.
🛑FULL STOP
But it didn't do that
It pursued low-quality growth in Europe, France -- even the US
Terrible decision!
These forays grew revenue, but there was NO MOAT surrounding these far-flung businesses.
And meanwhile, by not investing in SE Asia fulfillment, competitors like Lazada and even TikTok were given an opportunity.
Yes, building fulfillment = slower growth. But also SUSTAINABILITY
And meanwhile, by not investing in SE Asia fulfillment, competitors like Lazada and even TikTok were given an opportunity.
Yes, building fulfillment = slower growth. But also SUSTAINABILITY
By end of 2022, Forrest Li realized some problems
🎮 Gaming division saw growth plummet
🏦Cash pile was down to ~$6B
📉 FCF was ~($2 billion)
Low-quality e-commerce revs dried up
Moat around SE Asia ecommerce was weak
But he needed profits fast!
What did he do?
🎮 Gaming division saw growth plummet
🏦Cash pile was down to ~$6B
📉 FCF was ~($2 billion)
Low-quality e-commerce revs dried up
Moat around SE Asia ecommerce was weak
But he needed profits fast!
What did he do?
He pulled off a miracle.
Went from huge FCF losses to gains in just two quarters
HOW?
1️⃣ Slash sales and marketing by ~60%
2️⃣ Increase fees like crazy for Shopee users
It did the trick in the short-run, but may have been a long-term death nell
Went from huge FCF losses to gains in just two quarters
HOW?
1️⃣ Slash sales and marketing by ~60%
2️⃣ Increase fees like crazy for Shopee users
It did the trick in the short-run, but may have been a long-term death nell
Would YOU use Shopee with such price increases?
Since fulfillment wasn't built out, the only moat = brand.
But Li was tarnishing brand
Wall St didn't care, though, it loved the profitability. Shares jumped ~90% in a few months
Since fulfillment wasn't built out, the only moat = brand.
But Li was tarnishing brand
Wall St didn't care, though, it loved the profitability. Shares jumped ~90% in a few months
But if you only satisfy Wall Street -- and not your CUSTOMERS, the chickens will eventually come home to roost.
That's what's happening now.
Core marketplace revs were up 37% -- but that's off price increases.
Gross orders were only up 10%
That's what's happening now.
Core marketplace revs were up 37% -- but that's off price increases.
Gross orders were only up 10%
And NOW Li says he's investing in fulfillment - 3️⃣ years too late
If they pull it off, today's prices look VERY tempting
But I won't be putting a dime in.
$SE squandered of a GOLDEN opportunity due undisciplined sales grabs across the globe.
There are better places for my $$
If they pull it off, today's prices look VERY tempting
But I won't be putting a dime in.
$SE squandered of a GOLDEN opportunity due undisciplined sales grabs across the globe.
There are better places for my $$
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