Please ensure Javascript is enabled for purposes of website accessibility

Why Sea Limited Stock Popped 5% This Morning

By Rich Smith – Aug 19, 2020 at 12:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales doubled in Q2. Analysts like that a lot.

What happened

One day after Sea Limited (SE -0.28%) reported market-beating results featuring a more than 100% gain in revenue year over year (sparking a surge in its stock price), shares of the Singapore-based e-commerce company are marching higher once again -- up 3.1% as of 11:35 a.m. EDT today.

You can thank Wall Street for that.

An upward-trending arrow over the numbers 2020 increasing in size

Image source: Getty Images.

So what

So far today, reports no fewer than three separate analysts raising their price targets on Sea stock in response to yesterday's news. Stifel Nicolaus thinks the stock is now worth every penny of the $150 share price that it currently carries (up from an earlier valuation of $68 a share). Goldman Sachs now believes Sea Limited is worth $175. And right in the middle is Piper Sandler.

In a note covered by today, investment bank Piper Sandler hails Sea's "strong" Q2 results and predicts that a "secular rising tide" in the businesses of online gaming, e-commerce, and digital payments will drive "strong near-term growth, followed by long-term profitability" for Sea Limited stock.

Now what

Admittedly, Sea is not profitable yet. According to data compiled by our friends at S&P Global Market Intelligence, Sea lost $393 million last quarter, for a total of $1.2 billion over the past 12 months.

That being said, free cash flow at the company was an incredibly strong $248 million in Q2 -- easily the best cash quarter Sea has ever produced. If the company can prove that Q2 was no fluke but the start of a trend of profitable and accelerating growth, Sea Limited stock just might be worth what investors are paying for it today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Sea Limited. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sea Limited Stock Quote
Sea Limited
$60.50 (-0.28%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.