SEA (formerly known as Garena)

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It didnt take long for shopee to be the target again. Based on Dreamybear's linked report, there is a simple way for Sea to be cashflow positive. End its shopee Brazil operations which will save $1.1 billion in cash burn annually. However, this will mean GMV will decelerate this year by a lot (at least 10%).

Simple solution to improve cash flow
(20-08-2022, 02:14 PM)CY09 Wrote: The issue is how Shopee is executing its growth. It operates at a total negative margin where as it scales up it makes more losses.

Recently i bought a 3 in 1 USB cable which allows me to charge various USB phones at a price of $0 (retails at $5). There is no way shopee is making money on this and is paying for its delivery to me and 7 cents for me to put a nonsensical review (which I intend to). This is the business model which enables them to report $75 billion GMV. Lazada does not engage in such extreme negative pricing and hence is stuck at a $20 billion GMV.

Sea Money/Shopee pay is in this extreme problem. I have been using their 50 cents off at no min spend to purchase small value groceries at sheng shiong at either 100% discount or down to 20% discount. Sea is engaging in predatory pricing in its attempt to oust grabpay.

In three quarters since its equity raising, Sea has been burning 1 billion each quarter. Previously in 3Q 2021, I had estimated it will run into problem in 2025. However, the cash burn run has grown to 1 billion per quarter. With 7.8 billion in cash left + short term investments, it has accelerated to 2024 where Sea will run out of cash and need to do equity raising. Forrest Li is doing a pretty bad job in running the company, similar to Palantir's CEO.

The main problem for these 2 companies is that their admin and general expenses (where wages are classified) ballooned in their fight to hire more tech employees. It was evident in Sea Group where share based compensation grew by 65%. Paying your workers so high rate while your product is selling at negative margin is an implausible business proposal

Good news to shareholders, but bad news to me : (

Shopee has removed its 50 cents off at no min spend and 12% rebate shopeepay vouchers. Inflation is going bite me hard because I have been using them for have lunch at the same price as last year. Now i have to pay the inflaition adjusted prices.

Secondly, the $0 items are gone.

The era of cheap money is gone and cheapos like me have to face the harsh reality of inflation

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