Please ensure Javascript is enabled for purposes of website accessibility

Why Sea Limited Stock Was Climbing Today

By Jeremy Bowman - May 18, 2021 at 2:29PM

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

A solid earnings report helped lift the stock this afternoon.

What happened

Shares of Sea Limited (SE -2.32%) were moving higher today after the Southeast Asian e-commerce and digital gaming company reported first-quarter earnings this morning. The stock actually opened up lower initially as Sea missed analyst estimates, but investors pounced on the sell-off, bidding the stock higher on what was mostly a strong report.

As of 1:02 p.m. EDT, shares were up 2.9%.

The reception desk at a Sea Limited office.

Image source: Sea Limited.

So what

Revenue soared 146.7% to $1.76 billion in the quarter, though that was short of estimates at $1.81 billion. Sea's digital entertainment division, known as Garena, posted 117% growth to $1.1 billion, while e-commerce sales continued to skyrocket with sales up 250.4% to $922.3 million, and strong growth in its marketplace and in direct sales.

Garena continues to be the profit driver with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in that division growing 140% to $717.3 million. At Shopee, its e-commerce business, its adjusted EBITDA loss widened from $264.1 million to $412.9 million, though its loss per order declined from $0.61 to $0.38, showing the business making progress toward breakeven. 

On the bottom line, its adjusted loss per share expanded from $0.52 to $0.62, which was worse than estimates at $0.46.

Sea Money, the smaller digital payments segment and the third leg of Sea's business, saw total payment volume more than triple in the quarter to $3.4 billion. It now has 26.1 million quarterly paying users.

On the earnings call, CEO Forrest Li said:

We are pleased to start 2021 on a strong note with our results for the first quarter showing continued high growth across all our businesses. Even with the revenue recovery in offline activities in our region since the second half of 2020, our strong performance in terms of users' growth and engagement shows that digital adoption is still rising healthily as the communities we serve continue to embrace the benefits of online lifestyle.

Now what

Looking ahead, Sea held its guidance for the year, calling for $4.3 billion to $4.5 billion in digital entertainment bookings and $4.5 billion to $4.7 billion in revenue for e-commerce.

The company's Free Fire game has helped drive its growth in e-commerce. The game has been a big hit across Latin America, Southeast Asia, and India where it has established itself as a leader in mobile games.

Sea was a big winner during the pandemic, but the stock has pulled back in recent months as growth stocks seem to be digesting those gains. Still, the first-quarter report shows the tech company remains a growth juggernaut.

Jeremy Bowman owns shares of Sea Limited. 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
SE
$85.54 (-2.32%) $-2.03

*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
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

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.