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Why Sea Limited Stock Jumped Today

By Joe Tenebruso – Updated Aug 18, 2020 at 4:53PM

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The international e-commerce star is growing at a torrid clip.

What happened

Shares of Sea Limited (SE 4.76%) jumped 8.7% on Tuesday, following the release of the Singapore-based tech company's second-quarter results.

So what

Sea's revenue soared 102% year over year to $882 million, fueled by broad-based growth across its online gaming, e-commerce, and digital payments businesses.

Notably, Sea's quarterly active users in its digital entertainment segment climbed 61% to 500 million, while its paying users surged 91% to 50 million. The gains were driven in part by the strong performance of Sea's self-developed megahit game, Free Fire, which hit a peak of over 100 million daily users and was the highest-grossing mobile game in Southeast Asia in the second quarter.

A rising bar chart formed from translucent crystals

Sea Limited's gaming and e-commerce businesses are booming. Image source: Getty Images.

Still, Sea remains unprofitable; it generated an operating loss of $373 million, compared to $235 million in the year-ago quarter. The company did, however, produce adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $7.7 million, compared to an $11 million loss in the prior-year period.

Now what

With leading positions in digital entertainment and e-commerce in the fast-growing Southeast Asia region, Sea Limited is well-positioned to benefit from the rapid expansion of these markets in the coming decade. Moreover, with Chinese tech titan Tencent Holdings a major shareholder, Sea Limited has the backing of a powerful force in the global gaming and payments industries. That should only help to boost its odds of success.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Sea Limited and Tencent Holdings. The Motley Fool has a disclosure policy.

Stocks Mentioned

Sea Limited Stock Quote
Sea Limited
$61.15 (4.76%) $2.78

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