What happened
Shares of Sea Limited (SE 2.00%) gained 34.4% in June 2020, according to data from S&P Global Market Intelligence. The Singapore-based e-commerce, payments, and online gaming specialist didn't have much news to share last month, but the stock continued a dramatic climb that tripled Sea's stock price in six months. You could call June's surge a logical continuation of Sea's 44% rise in May.
So what
The Shopee online shopping storefront posted 74% year-over-year revenue growth in May's first-quarter report, while the Garena-branded digital entertainment group saw 30% higher sales. Sea's dual focus on e-commerce services and online games is a perfect recipe for success under the COVID-19 lockdowns that continue to paralyze the global economy in many ways.
Image source: Sea Limited.
Now what
Sea didn't have much to say last month, but analysts were heaping praise over the company and stock. JPMorgan raised its price target on Sea from $79 to $127 per share near the end of June, followed by a $130 price target from Stephens.
Stephens analyst Jeff Cohen underscored the high-quality demographics in Sea's Southeast Asian target markets and suggested that the company could expand its gaming and e-commerce services to new markets in the region.
This isn't a cheap stock, trading at 22 times trailing sales with negative earnings and cash flows. Sea is expanding its user base and chasing top-line growth with the pedal to the metal, leaving profit-taking for some undefined point many years down the road.
