Our future is bright!

2022-3-7

Dear Sailors,

Our share price has dropped a lot recently. Given our great stock price performance over the last few years, I know a lot of you are wondering "what happened?”

I am writing to you to share my thoughts on why this happened, and where we go from here.

It is important to know that this drop did not only happen for us. It happened across the capital market, especially for tech companies. This could be the market reacting to things like war breaking out in Europe, creating fear and uncertainty. It could also be a reaction to countries reopening after the Covid-19 pandemic: as people spend more time outside their homes and less time online, tech companies may seem less exciting for investors. These market sentiments are beyond our control and hard to predict.

That being said, the capital market may have also been reacting to some developments in our businesses, and some decisions we have made to pursue our long-term goals.

First, for the past 2 years, the pandemic gave our businesses strong tailwinds, accelerating the world’s transition to the digital economy and boosting our growth. Like most game companies, our game business is now seeing some of that growth slow post-pandemic, since the fourth quarter of 2021. It is a challenge, but driven by external circumstances, not our ability to deliver excellent games. So I am confident we will manage to return to strong growth again.

Second, we made public our decision to continue to invest capital into Shopee’s growth and Sea’s R&D capabilities. This means that, for the next few years, we will continue to invest instead of focusing on harvesting profits. Some investors may prefer a different approach, but this is us taking a longer term view. We have growing scale, market leadership and deep cash reserves. We believe it is best for us to invest in capabilities now that will let us capture huge growth opportunities in our future.

I know that many of you are Sea shareholders, and that Sea stock is a significant part of your compensation package. So the movement of our share price has a real impact on your personal and family finances. This drop is painful, and you might be feeling frustrated, disheartened, or worried about Sea’s future.

I ask you to trust the fundamental strengths of our company and team. Do not fear: we are in a strong position internally, and we are clear on our next steps. This is short term pain that we have to endure to truly maximise our long term potential.

I remain convinced that our future is bright and that our future share price will reflect this.

Firstly, we have faced and overcome challenges like this before. Most of our Sailors joined Sea in the last 2-3 years, and in that time you would have only seen our stock price rising and rising, among the best performing stocks in the world over that period.

But the Sailors who have been here longer remember more challenging times. When we first listed on the NYSE, our IPO price was $15 but our stock dropped soon after, staying on a downtrend for most of the next 18 months and hitting a low of $10. It was a difficult period, full of anxiety. And then, our share price started to take off in late February 2019.

Were we a significantly different company before and after February 2019? Of course not. Sometimes it just takes longer for the capital market to understand and appreciate our business decisions. This time is no different. We have faced headwinds before, and we know how to weather them.

Secondly, ups and downs are not unusual for any company that retains its start-up, entrepreneurial spirit. Do you remember what I wrote to you in my Birthday note last year? “Although we are bigger than ever before, I want us to feel like we are still a small company – relative to what we aspire to become… We are still at the start of our journey.”

I still mean every word. The scale of our ambition remains unchanged: to make a long-lasting mark in history. To chase innovation and impact, over dollars and cents. To serve the under-served and uplift lives through technology.

I and Sea’s entire leadership team remain as excited as ever about our future. This is because we know how committed all of you are to what we want to do in the world. The capital market can be volatile, moving sharply as world circumstances change. But we know how to adjust, adapt, and keep running. We are not here to run a short race; we are in this for the long haul.

We are Sailors, we are explorers, we retain our frontier spirit, we have global ambitions, and we will continue to take risks – smartly, not blindly. In doing so, we stay true to who we are, and what has brought us to the heights we have already achieved.

I hope this email helps assure you about the future of our company. I encourage you to keep your chin up and stay focused on our long term mission and ambition: to change the world, to improve lives, and to do it better than anybody else. Let us deliver our best every day, and look forward to when we can all get together to celebrate our success.

Onward, Sailors! I believe in us.

Sincerely,
Forrest