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Why Sea Limited Stock Surged 43.6% in May

By Billy Duberstein – Jun 3, 2020 at 9:00AM

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The Southeast Asian e-commerce, gaming, and digital payments company is benefiting from the strong digital economy.

What happened

Shares of Southeast Asian internet giant Sea Limited (SE -2.13%) surged 43.6% in May, according to data from S&P Global Market Intelligence.

The e-commerce, digital games, and payments company capitalized on the stay-at-home economy in during the first quarter. Those results were reflected in strong revenue growth reported on its May 18 earnings release, with management guiding to continued strength through April.

A map of southeast asia with several pins stuck in the map in various places.

Image source: Getty Images.

So what

In the first quarter, Sea Limited grew revenue 57.9% to $913.9 million, beating analyst expectations. Loss per share of $0.52 came slightly worse than expectations, but in this market, revenue growth is king, and Sea Limited's stock rose strongly after results came out. 

With a business that spans e-commerce, mobile games, and digital payments to emerging economies such as Taiwan, Singapore, Thailand, Indonesia, Vietnam, the Philippines, and Malaysia, Sea Limited is perhaps ideally suited to the current times, like (AMZN -3.01%) is in the United States.


Q1 2020 Total

Growth YOY

Quarterly users

402.1 million


Paying users

35.7 million


Digital entertainment revenue

$512.4 million


E-commerce revenue

$314.0 million


Digital financial services revenue

$10.7 million


Other services revenue

$76.8 million


Total revenue

$913.9 million


Data source: Sea Limited Q1 earnings presentation. YOY = year over year.

Not only was the first quarter strong, but management pointed to accelerated growth for April. Sea's mobile game Free Fire is, well, on fire (forgive the pun), with 100% year-over-year growth in paying users during the month of April, even after the quarter ended. More of the company's Shopee e-commerce users are using Sea's mobile wallet, and Shopee orders themselves were projected up about 140% in April as well.

Now what

Though Sea Limited isn't profitable yet and recorded big adjusted net losses of $239.4 million just in Q1 alone, like other e-commerce and online gaming plays, Sea is riding big secular tailwinds that are only being accelerated by coronavirus. As such, look for continued strong revenue growth this year as Southeast Asia adopts e-commerce more and more. For that reason, Sea should be at the top of any investors' list of international stocks to watch in 2020.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Billy Duberstein owns shares of Amazon. His clients may own shares of the ompanies mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Sea Limited and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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