The Indian government has banned the download of 54 mobile applications on the grounds of “national security”, including a product released by Garena exclusively Free Fire.
The Free Fire ban like what happened to PUBG Mobile in 2020 (published by Tencent), once again shocked the gaming industry.
The importance of Free Fire to Garean’s parent company, Sea Group, is undisputed. From the breakthrough in emerging markets like Brazil to the success in markets like the US, there has been a strong growth momentum that has kept Sea’s game revenue and share price positive over the long term.
Sea Group’s share price plummeted.
According to Sea’s Q3 2021 financial report citing data from App Annie, Free Fire is the second highest mobile game in terms of MAU (monthly active users) on the global Google Play platform. It is also the highest-grossing mobile game in South America and Southeast Asia for nine consecutive quarters. This game has the highest grossing in India for 4 consecutive quarters…
Free Fire’s rapid growth in India has benefited from the September 2020 ban of PUBG Mobile, the game that was once most popular in the South Asian country, when there were no competitors left.
It was this success that caused Sea’s share price to skyrocket in more than a year: from more than $50 in March 2020 to more than $360 in October 2021.
The report said the group lost 16 billion USD after the blow from India.
However, since last October, Sea stock has started to slide. At the beginning of January this year, Tencent announced a reduction of 21.3% of its shares to 18.7% and Sea dropped 11% that day. On February 14, following the news that Free Fire was banned, Sea’s stock price suffered another heavy blow, falling more than 18% to close at $129.
In fact, Sea is down more than 40% since the start of the year and more than 60% since last October. Some analysts believe that factors pulling Sea’s stock price include slowing game revenue, user growth, and pressure on the company’s e-commerce business.
However, Sea, known as “little Tencent” in Southeast Asia, is seen by some institutions as a good opportunity to buy bottoms when the company’s share price fell last year. For example, HHLR Advisors, the fund manager with a focus on secondary market investments under Hillhouse Capital, significantly increased its Sea holdings in the fourth quarter of last year, and later became the company’s top 10 holdings. it. In the fourth quarter, the number of shares held at Sea increased from 1.92 million shares to 2.188 million shares, an increase of 13% compared to the previous quarter.
However, this year there are consecutive disadvantages or negatives, its investment value has decreased significantly.
