Shares of Sea Limited ( SE 3.38% ) On Tuesday, the stocks were showing gains, increasing by 11.5% as of 2:35 p.m. ET.
Today, the company from Southeast Asia that operates in e-commerce, fintech, and gaming sectors announced its earnings, which were a bit different from what analysts had predicted. However, the company demonstrated ongoing progress in all three of its business divisions.
The sea is making a comeback.
Sea Limited experienced significant success during the pandemic period, with its stock price peaking at $372 per share towards the end of 2021. As the stock price was hovering around the mid-$60s before the earnings report, there was a possibility that the stock was set for a rebound.
Total revenue increased by 23% to reach $3.81 billion, surpassing the predictions made by analysts. However, the earnings per share of $0.14, according to the generally accepted accounting principles, fell slightly short of the estimated $0.19. Despite the lower profits, it seems that the performance of individual divisions was satisfactory enough to please investors.
Significantly, the gaming department of Sea, under the leadership of the popular game Free Fire Played a key role in the stock’s increase and subsequent decrease following the peak of the pandemic. Despite being the least lucrative sector for Sea, gaming is actually the most profitable one.
The department has experienced a decline since the beginning of 2022, but in the recent few quarters, Free Fire The numbers have become steady and started to increase once more. Following a decline in daily active users to 528.7 million in the fourth quarter of 2023, there has been growth in each subsequent quarter, leading to a total of 648 million users in the second quarter, representing a 19% increase compared to the previous year.
Although the crucial Shopee e-commerce business exhibited a minor reduction in profit before accounting for interest, taxes, depreciation, and amortization, The company has seen an increase in profits for the third consecutive quarter since shifting its focus back to growth mode last year.
Following the decision made by the company in the third quarter of the previous year to resume investments for growth, it seems that these investments are proving to be successful. Although the profit in online retail may have led to a shortfall in earnings, the management has also raised Shopee’s estimate for the total value of goods sold for the year to achieve a growth rate of around 20%, which is higher than the original goal of nearly 20%.
The gaming sector is displaying more positive signs of improvement, while Shopee’s investments are leading to anticipated growth and reduced losses, which are the key factors investors were looking for.
Is it possible for the sea to reach record levels in the near future?
It is unlikely that the sea stock will reach the high $300 level again in the near future, but there is a possibility over time. The stock has significantly dropped in value since late 2021, but the company’s management has effectively steered through the period after the pandemic. Initially, they reduced expenses to increase profits, and later shifted focus towards growth when the situation demanded it.
Sea has a strong history of successfully reaching its business objectives, which positions it favorably as a top player in the rapidly expanding Southeast Asian market through its three diverse business ventures.
