Sea's First-Ever Quarterly Profit Boosts Billionaire Forrest Li's Wealth By $919 Million Overnight

The New York-listed gaming and e-commerce firm Sea Ltd. announced its first quarterly profit, sending its New York-listed shares soaring, and lifting the fortunes of its billionaire cofounder Forrest Li by $919 million over the course of just one day.

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In late Tuesday's financial report, Sea reported a net profit of $422.8 million for the fourth quarter, up from a net loss of $616.3 million a year earlier. The company's total revenue increased 7.1% to $3.4 billion last quarter, and its e-commerce platform Shopee also became profitable during this period.

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"We are starting off 2023 on a much stronger footing than we were a year ago," Li, Sea's chairman and group CEO, in a statement. “Since late last year, we have systematically shifted our focus from focusing on efficiency to focusing on profitability and we have already seen significant improvements in our bottom line as a result.”

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The company turned profitable in the third quarter of this year as a result of massive cost-cutting measures that included the retrenchment of thousands of employees, salary cuts, and a reduction of sales and marketing expenses by 61% to $473.6 million as a result of these measures. A large part of Shopee's global expansion strategy has been halted owing to its decision to close down operations in India and Europe while focusing on key markets in Southeast Asia, Taiwan, and Brazil as part of that strategy.

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“Our approach is to do less but do it better as we serve our users across our digital ecosystem as we continue to transition and maintain our focus on sustainable growth," Li stated as he spoke of the need to do less, but do it better in serving our users. “We have a strong pivot going on right now, and we are closely monitoring the market environment in order to adjust our pace and fine-tune our operations accordingly, given the macro uncertainty and our recent strong pivot.”

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With the turnaround in the fourth quarter, Sea was able to reduce its net loss for the full year to $1.7 billion from $2 billion the year before. The total group revenue for 2022 is expected to increase by 25% to $12.5 billion, with e-commerce sales increasing by a whopping 64% to $7.5 billion, and contributions from digital entertainment declining by 10% to $3.9 billion. Despite the fact that Sea's most profitable business is digital entertainment, contributions have dwindled after its flagship mobile game Free Fire was banned by the Indian government in February.

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Sea, which recently turned profitable, saw its stock price jump 22% to $80.06 on Tuesday in New York trading, the company's highest close in six months, as its shares turned profitable. It has been estimated that Li's net worth has increased to $5 billion as a result of the stock rally, compared with $4.2 billion when the list of Singapore's 50 Richest was last published in September, according to data from Forbes.

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With the help of Gang Ye and David Chen, Li co-founded Sea in 2009, the same year that the trio established the online gaming platform Garena. After six years, Sea started Shopee in Singapore, which has grown into a regional e-commerce behemoth since it was founded in 2010. The two partners are originally from mainland China, but they have now become naturalized citizens of Singapore as well.

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