What the bears will tell you about that plan

Sea's e-commerce and other services (including fintech) revenue soared 157% to $4.6 billion in 2021, then grew another 84% year over year to $3.3 billion in the first half of 2022. But within that total, Shopee's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss nearly doubled to $2.6 billion in 2021, then widened year over year from $993 million to $1.4 billion in the first half of 2022.

As Shopee's growth cooled off and its losses widened, Free Fire lost its momentum. Garena's bookings fell 34% year over year to $1.5 billion in the first half of 2022. That slowdown was exacerbated by an abrupt ban in India, one of its top markets, earlier this year. As that profit engine stalls out, Sea's losses will widen further.

The bears will claim that Sea's business is collapsing like a house of cards. Analysts expect its revenue to rise just 25% to $12.4 billion this year as its adjusted EBITDA loss widens to $2 billion. That slowing growth and red ink will make Sea a tough stock to own as interest rates continue to rise.