Sea Limited (SE 1.42%) is what I like to call a three-headed monster. The holding company consists of:
- Garena (esports and mobile gaming)
- Shopee (e-commerce)
- SeaMoney (financial technology)
Sea is backed by Chinese technology company Tencent (TCEHY -0.33%), which owns 22.9% of Sea's outstanding shares as of March 5, 2021. Tencent has a strong balance sheet with more than $6 billion in cash, and it has mentored Garena into a global gaming powerhouse. Sea has grown impressively by leveraging its freemium game Free Fire. In Q1 2021, Free Fire was the highest-grossing mobile game in Southeast Asia, India, and Latin America. It's important to note that Sea is expanding more into Latin America, which could further boost its growth engine.
Sea Limited combines several exciting disruptive internet and mobile growth trends into one business model. Global internet access, adoption, and digitalization are rapidly increasing, and the number of digital buyers continues to climb annually. Asia has nearly 3 billion potential internet users, and the penetration rate is only around 64%. Additionally, Latin America has nearly 500 million potential internet users with an approximate 75% penetration rate. This creates a massive total addressable market for Sea, and investors should take notice.
Today, I do a deep-dive analysis of Sea Limited. Can this three-headed monster be the next 10x stock in your long-term investing growth stock portfolio? Let's dig in and find out!