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Why Sea Limited Stock Rose 13.1% in April

By Royston Yang - Updated May 5, 2021 at 10:48AM

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The gaming and e-commerce company is rapidly expanding its reach in Southeast Asia.

What happened

Shares of Sea Limited (SE 0.15%) rose 13.1% in April, according to data provided by S&P Global Market Intelligence.

Sea's shares have performed well this year, surging 28.8% year to date, and are trading close to their all-time high.

Person wearing headphones while playing an online game on desktop computer

Image source: Getty images.

So what

The Singapore-based e-commerce company reported strong earnings for full-year 2020 with revenue doubling year over year to $1.6 billion. Sea Limited has two main divisions: online gaming under Garena, and e-commerce under Shopee. The company also introduced its fledgling digital currency known as SeaMoney that allows customers to transact using digital wallets.

Last month, Garena's popular mobile shooting game Free Fire took the top spot in the U.S. for the first time. It beat out PlayerUnknown's Battlegrounds Mobile by Chinese internet giant Tencent Holdings, as measured by player spending for battle royale games.

Free Fire more than quadrupled its revenue on a year-over-year basis for the quarter, and this strong growth was partly due to the removal of Epic Games' popular Fortnite from major mobile phone platforms. Separately, Garena also announced that it will publish Undawn, a new survival shooter game for desktops and mobile, in Indonesia, Malaysia, the Philippines, Singapore, Taiwan, and Thailand.

Now what

The company is firing on all cylinders as it continues to grow its game franchise and expand its e-commerce reach in Asia. Shopee just inked an agreement with Maxis, one of Malaysia's telecommunication operators, to launch a campaign for the Muslim Hari Raya holiday in May. It will provide Malaysians with access to over 3,000 products, further encouraging the use of Sea Limited's e-commerce platform. 

The digital financial services division under SeaMoney is also rapidly gaining traction, with more than 23.2 million quarterly paying users for its mobile wallet in the fourth quarter, up from 10 million in 2020's first quarter. Total payment volume also jumped from $1 billion to $2.9 billion in just three quarters. Digital payments in Asia are expected to triple to $1.5 trillion by 2030, providing ample growth opportunities for Sea Limited.

Royston Yang 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.

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