Sea Limited Stock Soars: Here’s Why Investors Are FOMOing In
Sea Limited just pulled off a market stunner—shares blasted through resistance like a meme coin on Elon's tweet. What's fueling the rally? Let's break it down.
The e-commerce engine revs up
Shopee's GMV numbers are eating competitors' lunch across Southeast Asia. No concrete figures? Doesn't matter—the street smells blood in the water.
Digital banking ducks macro headwinds
While traditional banks sweat over rate hikes, SeaMoney's fintech arm keeps onboarding users faster than a crypto exchange during a bull run.
Short squeeze or sustainable growth?
Analysts can't decide if this is fundamental strength or hedge funds getting caught with their spreadsheets down—either way, the chart looks like a BTC parabola.
Another day, another stock mooning while your 'diversified portfolio' collects dust. Maybe time to rethink that 60/40 strategy?
Sea fires on all cylinders
In the second quarter, Sea saw revenue rally 38.2% to $5.3 billion, while earnings per share of $0.65 missed expectations by $0.04. Still, Sea was profitable across its three businesses encompassing mobile games, e-commerce, and digital finance.
In e-commerce, revenue was up 33.7% on gross market value (GMV) growth of 28.2%, while segment EBITDA (earnings before interest, taxes, depreciation, and amortization) flipped from a $9.2 million loss a year ago to a $227.7 million profit. In digital financial services, revenue grew a whopping 70%, while adjusted EBITDA rallied 55% to $255.5 million. And in digital entertainment, which consists of mobile game publishing and Sea's self-produced hit Free Fire, bookings grew 23.2% year over year, with adjusted EBITDA up 21.6% to $368.2 million.
The combined growth resulted in whopping 364% growth in EPS, showing Sea's profitability beginning to take off from a near-breakeven level a year ago.
Image source: Getty Images.
Sea also highlighted a few big milestones. These included the eighth anniversary of Free Fire, showing off the "evergreen" nature of this game, which incredibly managed to grow bookings double-digits relative to last year. Management also said it now expects 30% bookings growth in the digital entertainment business this year, which is a massive improvement after a long hangover following the early days of the COVID pandemic.
In Shopee e-commerce, Sea also marked its fifth anniversary in Brazil, its only market outside of Southeast Asia. The company claimed in its press release that after just five years it's become the e-commerce leader in the country by order volume, which I'm sure is catching the attention of(NASDAQ: MELI) investors today.
Meanwhile, Sea's digital finance arm is beginning to see more adoption outside the Shopee platform, with Malaysia seeing 40% quarter-over-quarter growth in off-Shopee SPayLater loans, now making up more than 20% of the SPayLater portfolio in the country. More penetration outside of Shopee means SeaMoney could be on its way to becoming a major economywide financial institution.
High growth at a reasonable price
With its highly profitable mobile games business having stabilized, Sea's e-commerce and finance arms are now really gaining traction, growing strongly in a profitable manner.
While Sea may seem like an expensive stock trading at 46 times this year's and 31 times 2026's earnings estimates, that's also not a totally bananas price to pay for a company that's firing on all cylinders across not one but several high-growth businesses and geographies.
