When the major indices are hovering near their all-time high, investors should beware of stocks falling sharply. More importantly, stocks that fell in the absence of news are especially dangerous. Investors do not know why the high selling volumes in recent days are taking place.
Sea Ltd. (SE) is a Singapore-based e-commerce and mobile gaming firm. On Tuesday, the firm said that it is entering the cloud computing market. SE stock slumped by 9.09% to close at $80.43.
Markets interpret Sea’s consideration of publicly listing its financial services business as a bad sign. That would suggest that the unit is in the mature phase of the business cycle. Competition in that sector is also worsening.
Sea will have trouble competing with cloud computing giants. That includes Amazon (AMZN) with its AWS and Alibaba (BABA) with its cloud offering.
SoftBank (SFTBY) stock slumped throughout October. The stock failed to hold the $20-$22 range established in September. Investors are concerned that its heavy bet on OpenAI will not pay off. Anthropic, a competitor to OpenAI, will likely complete its IPO this year.
OpenAI said that it would delay its IPO until 2027. It cited concerns about AI safety for the delay. However, markets expect its operating costs to soar faster than revenue growth. That would limit the funds it would raise in an IPO.
SFTBY stock is trading lower to reflect the decreased valuation of OpenAI.
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