Sea Limited Earnings and Stock Analysis

TL;DR: Sea Limited might not be a good investing idea.

Sea Limited is a global consumer internet company. It has the following products:

1. Garena: Online games development and publishing
2. Shopee: Shop online anytime, anywhere
3. SeaMoney: Digitalising financial servies.

Latest Earnings Results:

Revenue: $3.1B, +5.2% y/y

E-commerce: $2.1B, +20.6% y/y

Digital Entertainment Rev: $529.4M, -41.2$ y/y

Digital Financial Service Rev: $427.9M, +53.4% y/y

Net Income: $331M, up from $(931.2M) loss a year ago

“In the past couple of quarters, we have not only achieved self-sufficiency, but also demonstrated the profitability of our model and our ability to manage fast and significant shifts in operational focus as we see fit. Given this, we have strengthened our execution capabilities and increased the stickiness of our ecosystem.”

Bullish Opinions:

• Profitable

Having significantly improved our efficiency and unit economics over the past few quarters, we have become the first and only e-commerce marketplace in Southeast Asia with a proven profitability record at scale.

• Growth: Gaming revenue likely bottomed. Financial services revenue has a 50%+ growth rate. The company also can and will invest more for growth.

“Bookings for the game also grew quarter-on-quarter for the first time in the past seven quarters.”

“We also see new opportunities for growth, in particularly relating to live streaming as well as e-commerce related to — with video content.”

“We’re in a better-than-ever position to actually capture a larger slice of growth in the pipe that we already see in the market.”

Bearish Opinions:

• Growth is slowing down: Digital Entertainment revenue was -41.2% y/y, and Sales of goods were -15% y/y
• Management did not provide critical data points, including GMV, take rate, and outlook.
• The company’s vision is not clear. No evidence shows synergy among the company’s gaming, e-commerce, and fintech businesses.
• After the partnership with Tencent ended, the gaming business might be a distraction for the company

Conclusion: Neutral

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