Why Sea Limited Stock Rocketed Higher on Tuesday
Key Points
Sea Limited delivered double-digit growth across its gaming, e-commerce, and fintech segments.
This helps reduce the company's reliance on any single segment.
Even after today's price spike, the stock is still attractively priced.
- 10 stocks we like better than Sea Limited ›
Shares of Sea Limited (NYSE: SE) charged sharply higher Tuesday, gaining as much as 14.8%. As of 11:48 a.m. ET, the stock was still up 12.8%.
The catalyst that sent the e-commerce, digital entertainment, and fintech specialist higher was its quarterly financial report, as some aspects were much better than expected.
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Game on
For the second quarter, Sea Limited generated revenue of $7.8 billion, up an impressive 48% year over year. The company's bottom line accelerated, with net income of $458 million, up 11%. This resulted in adjusted earnings per share (EPS) of $0.70.
To put those numbers in context, analysts' consensus estimates were calling for revenue of $7.1 billion and EPS of $0.86. So despite the bottom-line miss, investors celebrated the improvements.
Sea Limited continue to produce strong growth across its trifecta of digital segments.
Its Shopee e-commerce segment delivered a record-setting quarter, with revenue of $5.1 billion, up 45% year over year, spurred by record gross merchandise volume (GMV), order volume, and revenue. CEO Forrest Li said the company was "optimistic" that Shopee would achieve $1 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), a significant profitability milestone for the segment.
Its Garena digital entertainment segment posted revenue of $697 million, which climbed 41%. Perhaps as importantly, booking rose 16% to $764 million, setting the stage for future growth. Quarterly active users of 666 million edged slightly higher, while its paying user ratio climbed to 10.2% from 9.3% in the prior-year quarter.
Last but not least was its Monee fintech segment, which generated digital financial services revenue of $1.2 billion, up 58%. Overall, its loan portfolio jumped 63% to $11.1 billion, while non-performing loans remained stable at 1% of total loans.
The company continued its push into Brazil, which remains its fastest-growing market.
Despite today's price spike, Sea Limited remains attractively priced at less than 25 times next year's expected earnings, a reasonable price for a company that has delivered double-digit growth in each of its three segments.
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Danny Vena, CPA has positions in Sea Limited. The Motley Fool has positions in and recommends Sea Limited. The Motley Fool has a disclosure policy.
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