Shares of Sea Ltd. (NYSE: SE) plunged more than 11% on Tuesday after news that the Chinese social and video gaming company Tencent Holdings Ltd. (TCEHY) seeks to reduce its stake.
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According to Bloomberg, Tencent, which owns 21.3% of the Singapore-based global consumer internet company’s outstanding shares, has reduced its stake to 18.7%. The company sold $14.5 million shares at $208 for a total value of around $3 billion.
Recently, Tencent also disclosed its plan to reduce its stake in Chinese e-commerce company JD.com (NASDAQ: JD) to 2.3% in the form of an interim dividend worth around $16.4 billion.
According to the source, anti-monopoly rules imposed by China and regulators’ concerns regarding web security might lead similar divestments to continue.
Official Comments
Tencent said in a statement that the divestment will provide “resources to fund other investments and social initiatives, while retaining a substantial majority of its stake in Sea and continuing to benefit from the company’s future growth.”
Notably, the company will not further reduce its stake in Sea for the next six months.
Wall Street’s Take
Recently, Bank of America Securities analyst Sachin Salgaonkar upgraded Sea to a Buy from a Hold but decreased the price target to $287 (45.07% upside potential) from $385.
Consensus among analysts is a Strong Buy based on 9 unanimous Buys. The average Sea price target of $398.67 implies 101.51% upside potential from current levels. Shares have gained 1.8% over the past year.
Investors
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Sea, with 2.9% of investors maintaining portfolios on TipRanks increasing their exposure to SE stock over the past 30 days.
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