Sea (SE) AI Stock Analysis

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Sea

(NYSE:SE)

Rating:77Outperform

Price Target:

$175.00

▲(5.67%Upside)

Sea Limited shows a strong overall performance, driven by impressive growth in its e-commerce and digital financial services segments, as highlighted in the earnings call. The company's financial performance is solid with significant revenue growth and improved profitability, although there is room for improvement in its profitability margins. However, the technical indicators suggest the stock might be overbought, and the high P/E ratio indicates significant overvaluation. Therefore, while the growth prospects remain robust, potential investors should be mindful of the valuation and technical outlook.

Positive Factors

E-commerce Growth

Shopee sustained its strong momentum with a 29% YoY increase in revenue and a 22% YoY growth in GMV, supported by favorable seasonality and a 50bps YoY improvement in take rate.

Financial Performance

Sea has positively surprised in the last 4-5 quarters with consistent beat and raise after every quarter.

Negative Factors

Market Position

Current stock price implies a massive premium to global peer average, requiring e-commerce margins to be well above guided steady state margins.

Valuation Concerns

Valuations are not cheap with expectations materially increased post 1Q results.

Sea (SE) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$98.04B

Dividend YieldN/A

Average Volume (3M)4.37M

Price to Earnings (P/E)116.5

Beta (1Y)1.64

Revenue Growth30.18%

EPS Growth1995.22%

CountryUS

Employees80,700

SectorConsumer Cyclical

Sector Strength62

IndustrySpecialty Retail

Share Statistics

EPS (TTM)0.91

Shares Outstanding546,492,100

10 Day Avg. Volume3,899,214

30 Day Avg. Volume4,371,915

Financial Highlights & Ratios

PEG Ratio0.53

Price to Book (P/B)9.64

Price to Sales (P/S)0.00

P/FCF Ratio25.88

Enterprise Value/Market Cap0.86

Enterprise Value/Revenue1.39

Enterprise Value/Gross Profit11.69

Enterprise Value/Ebitda29.51

Forecast

1Y Price Target

$174.14

Price Target Upside5.15% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

Sea Business Overview & Revenue Model

Company DescriptionSea Limited is a leading global consumer internet company headquartered in Singapore. It operates through three main business segments: digital entertainment, e-commerce, and digital financial services. Sea's digital entertainment segment is embodied by Garena, a global game developer and publisher. Shopee, its e-commerce platform, is a dominant player in Southeast Asia and Taiwan, offering a wide range of products across various categories. SeaMoney, the company's digital financial services segment, provides mobile wallet services and other financial solutions to individuals and businesses in the region.

How the Company Makes MoneySea Limited generates revenue through its three core segments. In digital entertainment, Garena earns money by selling in-game items, battle passes, and through partnerships with other game developers for publishing rights. Shopee, the e-commerce platform, makes money through transaction fees, advertising, and logistics services provided to sellers and buyers on the platform. SeaMoney, the financial services arm, earns revenue from transaction fees, merchant services, and interest from its lending activities. The company also benefits from strategic partnerships and investments that enhance its service offerings and market reach.

Sea Key Performance Indicators (KPIs)

Any

Garena Quarterly Active Users

Garena Quarterly Active Users
Measures the number of active users on Garena each quarter, reflecting the platform's popularity and potential for in-game revenue.

Chart InsightsGarena's active users have rebounded significantly since early 2023, reversing the prior decline. This resurgence aligns with a 51% increase in bookings and a 57% rise in adjusted EBITDA, driven by successful campaigns like the NARUTO SHIPPUDEN collaboration. The earnings call highlights robust growth in digital entertainment, suggesting strategic initiatives are effectively re-engaging users. However, potential volatility due to seasonal events and collaborations could impact future user metrics. Investors should watch for sustained engagement to gauge long-term momentum.

Data provided by:

Main Street Data

Sea Earnings Call Summary

Earnings Call Date:May 13, 2025

(Q1-2025)

% Change Since: 16.26%|

Next Earnings Date:Aug 19, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant growth across all business segments, with record e-commerce performance, strong digital financial services expansion, and an impressive rebound in digital entertainment. Despite some challenges related to forex fluctuations and competitive pressures, Sea Limited has shown robust profitability improvements and strategic growth initiatives, particularly in the fintech sector.

Q1-2025 Updates

Positive Updates

Record E-commerce Growth

Shopee delivered a record high GMV and gross order volume in the first quarter, with a 22% year-on-year increase in GMV to $28.6 billion and a 20% increase in growth orders to $3.1 billion.

Digital Financial Services Expansion

Monee's first-quarter revenue and adjusted EBITDA grew by more than 50% year-on-year, with a loan book increase of over 75% year-on-year to $5.8 billion.

Strong Digital Entertainment Performance

Garena's bookings grew 51% year-on-year, achieving the best quarterly performance since 2021, and adjusted EBITDA increased by 57%.

Improved Profitability

Sea Limited's total adjusted EBITDA was $947 million in the first quarter of 2025, compared to $401 million in the first quarter of 2024.

Successful Rebranding

The digital financial services business was successfully rebranded from SeaMoney to Monee, signaling a new phase of growth and expanded offerings.

Negative Updates

Forex Rate Fluctuations

Potential negative impacts on Shopee's growth due to fluctuations in foreign exchange rates in some markets.

Competitive Landscape Challenges

The introduction of TikTok Shop in Brazil and competitive pressures in ASEAN markets could impact Shopee's market share and growth dynamics.

Seasonal and Regional Volatility

Potential quarterly volatility in digital entertainment bookings due to the timing of significant collaborations and cultural events like Ramadan.

Company Guidance

In the Sea Limited First Quarter 2025 Results Conference Call, the company provided guidance across its three main business segments, emphasizing strong growth and improving profitability. For e-commerce, Shopee achieved a record high GMV of $28.6 billion, reflecting a 22% year-on-year increase and a 20% growth in gross order volume. Ad revenue saw significant growth, increasing by over 50% year-on-year, while logistics costs per order were reduced by 6% in Asia and 21% in Brazil. Sea's digital financial services segment, recently rebranded to Monee, expanded its loan book by over 75% year-on-year, reaching $5.8 billion, with revenue and adjusted EBITDA both growing more than 50%. The digital entertainment segment, Garena, reported a 51% increase in bookings and a 57% rise in adjusted EBITDA year-on-year, fueled by successful campaigns, including a collaboration with NARUTO SHIPPUDEN. The company maintains a 20% full-year GMV growth guidance for Shopee and expects continued strong performance across all segments.

Sea Financial Statement Overview

Summary

Sea demonstrates substantial growth and improving profitability, with robust cash flow generation. The company shows a balanced leverage position and has improved its return on equity significantly. While profitability margins are still relatively low, the trajectory is positive. Careful management of investments and further strengthening of equity will support continued financial health and growth.

Income Statement

Very Positive

Sea has shown strong revenue growth, with a significant increase from $13.06 billion in 2023 to $16.82 billion in 2024. The gross profit margin improved to 42.83%, indicating better cost management. Net income rose to $444 million, enhancing the net profit margin to 2.64%. EBIT and EBITDA margins also improved, suggesting operational efficiency. However, the profitability margins are still low, presenting room for improvement.

Balance Sheet

Positive

The debt-to-equity ratio is 0.49, reflecting a balanced leverage. The return on equity improved markedly to 5.30%, indicating better profitability relative to equity. The equity ratio stands at 37.01%, suggesting a moderate level of financial stability. Overall, the balance sheet shows a solid financial position but highlights the need for further strengthening of equity and asset management.

Cash Flow

Positive

Free cash flow has grown significantly, supporting robust cash flow generation. The operating cash flow to net income ratio is 7.38, indicating strong cash conversion. The free cash flow to net income ratio stands at 7.38, reflecting efficient cash management. However, the fluctuation in investing cash flows suggests a need for careful investment planning.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
16.82B	13.06B	12.45B	9.96B	4.38B
	Gross Profit
7.21B	5.83B	5.19B	3.90B	1.35B
	EBIT
662.15M	224.78M	-1.13B	-1.58B	-1.30B
	EBITDA
1.20B	908.47M	-1.02B	-1.30B	-1.18B
	Net Income Common Stockholders
444.32M	150.73M	-1.67B	-2.05B	-1.62B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
8.62B	5.36B	6.89B	10.16B	6.29B
	Total Assets
22.63B	18.88B	17.00B	18.76B	10.46B
	Total Debt
4.12B	4.46B	4.49B	4.25B	2.09B
	Net Debt
1.72B	1.65B	-1.54B	-4.99B	-4.07B
	Total Liabilities
14.15B	12.19B	11.19B	11.33B	7.04B
	Stockholders Equity
8.37B	6.59B	5.72B	7.40B	3.38B
Cash Flow		Free Cash Flow
2.96B	1.82B	-2.03B	-598.53M	219.59M
	Operating Cash Flow
3.28B	2.08B	-1.06B	208.65M	555.87M
	Investing Cash Flow
-5.04B	-5.80B	-2.43B	-3.77B	-886.91M
	Financing Cash Flow
1.68B	366.01M	400.26M	7.40B	3.73B

Sea Technical Analysis

Technical Analysis Sentiment

Positive

Last Price165.61

Price Trends

50DMA

140.32

Positive

100DMA

133.12

Positive

200DMA

115.99

Positive

Market Momentum

MACD

7.53

Positive

RSI

63.24

Neutral

STOCH

74.35

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SE, the sentiment is Positive. The current price of 165.61 is above the 20-day moving average (MA) of 161.25, above the 50-day MA of 140.32, and above the 200-day MA of 115.99, indicating a bullish trend. The MACD of 7.53 indicates Positive momentum. The RSI at 63.24 is Neutral, neither overbought nor oversold. The STOCH value of 74.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SE.

Sea Risk Analysis

Sea disclosed 60 risk factors in its most recent earnings report. Sea reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

We face manpower-related risks. Q4, 2022

We face risks related to our insurance business. Q4, 2022

We face risks related to logistics and fulfillment. Q4, 2022

Sea Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MELI	80 Outperform	$125.85B	61.06	49.11%	―	41.92%	81.11%
SE	77 Outperform	$98.04B	116.46	11.13%	―	30.18%	1995.22%
JD	77 Outperform	$51.61B	8.08	19.81%	2.96%	8.13%	91.39%
EBAY	77 Outperform	$36.24B	18.79	36.48%	1.42%	2.04%	-15.61%
CPNG	74 Outperform	$51.65B	205.71	6.06%	―	20.88%	-80.08%
ETSY	68 Neutral	$6.65B	45.33	-39.97%	―	2.18%	-32.87%
Sector *	62 Neutral	$6.88B	11.32	2.90%	3.87%	2.70%	-24.57%

* Consumer Cyclical Sector Average

Performance Comparison

Sea

165.61

92.64

126.96%

EBAY

eBay

78.61

26.37

50.48%

MELI

Mercadolibre

2,482.39

880.51

54.97%

33.12

3.53

11.93%

ETSY

Etsy

63.81

-2.26

-3.42%

CPNG

Coupang

28.45

6.27

28.27%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.