Ark Invest owned by Cathie Wood buys almost 15,000 shares of the mobile game developer, Sea Limited. Following the purchase on Monday, Sea Limited’s stock saw a significant rise of up to 8 percent. Despite the rather dull growth trajectory of Sea Limited over the past year due to multiple factors, Ark Invest sees a silver lining. Hence the purchase was worth a whopping $20 million. How this decision will play out in the future remains to be seen.
The What and Why
Ark Investors made the $20 million purchase on Monday. The element of surprise lies in the fact that the purchase falls on the same day when Sea Limited erased market value worth $16 billion, resulting in a plunge of about 20 percent. This is a direct response to the ban imposed by India on several apps including Garena Free Fire, which incidentally is one of the most popular mobile games owned by Sea Limited.
Monday’s purchase adds to the previous acquisition of Sea shares by Ark Investors. Ark has doubled its stake in the company and now it owns more than 1.8 million shares of Sea Limited. Business and success in business are all about the ability to see the light of opportunities amidst the dark. Perhaps that is the reason for Ark’s interest in Sea Limited which has been at its lowest since August 2020.
Looking back, Ark had reduced its position in the company by a huge margin during the second half of 2021, which resulted in a significant fall in its stakes from a whopping 3 million shares to one million. However now, the scene has changed and Ark sees potential and scope in Sea Limited which it is eager to utilize. Although at present, Sea Limited is a profitless and worn-out game developer, it seems like there is a latent value that Ark is eager to explore and use. Not just Ark Investors, Goldman Sachs also views the beaten-down company as something with value and potential which if cleverly leveraged can prove to be highly beneficial.
In the words of Piyush Mubayi, an analyst at Goldman Sachs, in the view of Goldman Sachs, Sea is a “winner in the fast-growing gaming, e-commerce, and digital finance markets in Asia, and expect further upside move from its successful move into Latin America.”
Whether the recent buying spree of Ark will prove to be successful remains to be seen. However, the pressure exerted by the rising interest rates might have a negative impact on speculative stocks.
