How culture helped Sea Ltd pivot, survive and thrive
October 16, 2026
-
3 min
Why did WCM’s Select Global Growth Equity Fund invest in this South East Asian company^?
WCM believes that culture is a company’s most underappreciated asset. This focus on culture was a critical component of the investment its WCM Select Global Growth Equity Fund (WCM SGG) made in Singapore-based Sea Limited, at a time when many investors doubted the former market darling’s ability to bounce back from a series of setbacks.
Founded in 2009 as an online game distributor, Sea rapidly built successful platforms across e-commerce (Shopee), gaming (Garena), and financial technology (Monee). This growth and success saw it win the title of “most valuable company in Southeast Asia” in 20211 .Then its fortunes changed, and between late 2021 and the end of 2022, its share price plummeted 85%.
WCM had been keeping an eye on Sea for some time, admiring the logical, methodical way it had expanded by using its “cash-cow gaming business” for funding. However, it was the way Sea’s culture evolved and strengthened during this time of crisis that proved the catalyst for the fund's investment.
The rise and fall of Sea
Before Covid, Sea Limited’s aggressive expansion had been rewarded by the market, but then the world changed. Unprofitable growth fell out of favour and Sea’s cash burn rate became the headline. While Sea’s market capitalisation reached as much as US$200 billion in October 2021,2 its shares dropped 40% in the final months of that year. In 2022, Sea’s largest shareholder, Tencent, reduced its stake to 18.7% from 21.3%3, its flagship game, Free Fire, was banned in India, and Sea was forced to shut down its Indian and Argentinean e-commerce businesses.
But, because Sea’s culture had been built on pragmatic adaptability, management was not only able to recognise it needed to pivot, but then actually do so. The firm exited non-core initiatives and focused on core businesses; all without destroying its customer base. Sea shifted to a ‘profitability’ mindset while strengthening its moat in e-commerce, gaming and online banking, adopting a ‘do less, do better’ approach.
In WCM’s opinion, Sea turned from a ‘growth at all costs’ mindset to one of ‘profit generator’ in just three quarters.4 The business showcased adaptability while maintaining its reputation for quick execution, say the portfolio managers of WCM's Select Global Growth Equity Fund, Sanjay Ayer and Michael Hayward, who were attracted by its investment strategy and growth compared to more established e-commerce operators like Mercado Libre.
“While we admired Sea's execution prior to their pivot, it was a deliberate cultural reorientation that changed the operating trajectory and ultimately aligned the business with WCM SGG’s own investment strategy5." say Hayward and Ayer.
“When we took a fresh look at Sea we concluded, 'Hey, this is as good as Mercado Libre, and it trades at 30% of the valuation. Sea has higher market share than Mercado Libre has in Brazil and Argentina and it has higher growth rates”.
Culture of quick action and clear communication leads to better results
After announcing the pivot in strategy in 2022, Sea employees had every right to feel nervous. There had been a sharp drop in the share price and multiple layoffs. However, clear communication from the company’s leadership helped to boost morale and rally the team on the mission ahead. In a series of now-seminal employee memos in 2022 and 2023, Sea founder Forrest Li detailed the change in strategy with accountability, vulnerability, and acknowledgement of the challenges. This culture of transparency proved pivotal to Sea’s turnaround.
While Shopee had expanded aggressively before 2022, this led to unsustainable cash burn. To stop the bleeding, Sea consolidated its focus to regions in Asia where Shopee had an established competitive advantage. From 2022, Shopee reduced user subsidies and increased its take-rate*, eventually turning EBITDA positive in 20246. That momentum continued in 2025 and Sea displayed its ability to maintain its leadership position in an economically tenable form.
Sea’s fintech lending business, Monee, was one of the reasons for Hayward and Ayer’s initial interest: the team believed it was an underappreciated asset that was likely to prove highly valuable in the long term. By localising growth in Asia, Sea’s management was able to ensure that Monee achieved profitability in 20237
The turnaround at Shopee and Monee meant that Sea’s gaming arm, Garena, was no longer solely subsidising losses. And, importantly, continued to generate cash flow. Meanwhile, Garena’s Free Fire continued as one of the world’s largest and most successful mobile games, continuing to generate strong and consistent cash flow, while working to resolve regulatory hurdles in India.
Will culture prove the difference once again?
Sea Limited’s share price rose around 80% through 2025, but after peaking in September 2025 it then dropped ~50%8 as investors became increasingly focused on its near-term profitability. Sea’s margins have temporarily narrowed at times as it invested in areas like Brazil and enhanced its e-commerce logistics capabilities. Since lows in March 2026, Sea’s share price has staged a recovery as its financial performance improved and it reported strong results in August 2026.9
Despite the volatile share price, Sea Limited remains a conviction holding for WCM which believes Sea’s capital investments are crucial for expanding Sea’s competitive advantage. Companies like Coupang, Amazon, and Mercado Libre went through similar stages where they invested heavily into their logistics networks to enhance customer service, accelerate delivery, increase platform gross merchandise value, and ultimately build stronger competitive advantages.
According to WCM CEO Paul Black: "Culture is the key that unlocks the power of a business to compound returns beyond anyone’s expectations." Sea Limited’s investors and employees will be hoping that its culture can make a difference once again.
