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Sea Limited (SE - Free Report) is a Zacks Rank #5 (Strong Sell) that engages in the digital entertainment, e-commerce, and digital financial service businesses in Southeast Asia and internationally.
The former high-flying stock continues to struggle as earnings consistently disappoint. While the stock is well off its 2021 highs, investors should be patient with the name until estimates start trending in the right direction.
About the Company
Sea Limited was founded in 2009 and is headquartered in Singapore. The company offers an online gaming platform Garena, an e-commerce platform Shopee, and a digital financial services platform SeaMoney
SE is valued at $30 billion and has a Forward PE of 38. The stock holds Zacks Style Scores of “F” in both Value and Growth. The company pays no dividend.
Q4 Earnings
Sea reported on March 4th, missing expectations by 150%. This was the second miss in a row, with an 89% miss coming in the last quarter. The company does not have a great track record of earnings beats, missing 11 out of the last 16 quarters.
On the positive side, revenues came in above expectations and the company posted its first annual profit since its IPO. However, EDIBTA was 126.7M, down from $495.7M last year. While this was above expectations, the stock moved lower after a reactionary move higher.
Earnings Estimates
While some analyst commentary was positive in the idea that the company is starting to make money, estimates are still trending lower. With the stock up almost 40% in 2024 investors should be cautious until this trend is broken.
Over the last 90 days, the current quarter estimates have fallen from $0.22 to $0.13, a drop of 41%. For the current year, estimates have ticked higher since EPS, but dropped from $1.60 to $1.40 over the last 90 days, a drop of 13%.
Technical Take
Sea traded as high as $372 in 2021 and fell to a low of $34.25 in early January. The stock is trading up over 60% off those lows, so the slight improvement in earnings was likely already expected from the market.
The bulls have broken the 200-day MA, which is a positive sign. However, the $60 level was resistance during the summer of 2023 and should be a roadblock for the bulls.
Investors should look for a pullback if interested in the name. The 200-day MA is at $45, 18% below current trading levels. This also lines up with a 50% retracement found by drawing 2024 lows to recent highs.
In Summary
Sea Limited is starting to show some signs of improvement on the bottom line, posting its first annual profit since the IPO. However, investors seem to be getting ahead of themselves as the stock is up 60% in under two months.
For those interested in an internet software name, a better option might be AppFolio (APPF - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) that is trading near all-time highs.
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Bear of the Day: Sea Limited (SE)
Sea Limited (SE - Free Report) is a Zacks Rank #5 (Strong Sell) that engages in the digital entertainment, e-commerce, and digital financial service businesses in Southeast Asia and internationally.
The former high-flying stock continues to struggle as earnings consistently disappoint. While the stock is well off its 2021 highs, investors should be patient with the name until estimates start trending in the right direction.
About the Company
Sea Limited was founded in 2009 and is headquartered in Singapore. The company offers an online gaming platform Garena, an e-commerce platform Shopee, and a digital financial services platform SeaMoney
SE is valued at $30 billion and has a Forward PE of 38. The stock holds Zacks Style Scores of “F” in both Value and Growth. The company pays no dividend.
Q4 Earnings
Sea reported on March 4th, missing expectations by 150%. This was the second miss in a row, with an 89% miss coming in the last quarter. The company does not have a great track record of earnings beats, missing 11 out of the last 16 quarters.
On the positive side, revenues came in above expectations and the company posted its first annual profit since its IPO. However, EDIBTA was 126.7M, down from $495.7M last year. While this was above expectations, the stock moved lower after a reactionary move higher.
Earnings Estimates
While some analyst commentary was positive in the idea that the company is starting to make money, estimates are still trending lower. With the stock up almost 40% in 2024 investors should be cautious until this trend is broken.
Over the last 90 days, the current quarter estimates have fallen from $0.22 to $0.13, a drop of 41%. For the current year, estimates have ticked higher since EPS, but dropped from $1.60 to $1.40 over the last 90 days, a drop of 13%.
Technical Take
Sea traded as high as $372 in 2021 and fell to a low of $34.25 in early January. The stock is trading up over 60% off those lows, so the slight improvement in earnings was likely already expected from the market.
The bulls have broken the 200-day MA, which is a positive sign. However, the $60 level was resistance during the summer of 2023 and should be a roadblock for the bulls.
Investors should look for a pullback if interested in the name. The 200-day MA is at $45, 18% below current trading levels. This also lines up with a 50% retracement found by drawing 2024 lows to recent highs.
In Summary
Sea Limited is starting to show some signs of improvement on the bottom line, posting its first annual profit since the IPO. However, investors seem to be getting ahead of themselves as the stock is up 60% in under two months.
For those interested in an internet software name, a better option might be AppFolio (APPF - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) that is trading near all-time highs.