Today's video focuses on Sea Limited (SE -0.98%) and its potential expansion into Europe. Online reports started to appear early this week that Sea Limited has plans of expanding into Poland. Sea Limited has not confirmed these claims, but they are appearing a week after previous reports of Sea Limited's expansion into India. Here are some highlights from the video.
- Expanding into a new market costs money, and if Sea Limited expands into too many countries at once, it could increase the bottom-line losses. The increase in potential losses can create a volatile scenario for Sea Limited's stock price.
- The previous countries Sea Limited has entered have had a solid user base of Free Fire, Sea Limited's popular mobile game. If you look at App Annie, Free Fire is not popular nor a high-grossing game in Poland. Sea Limited tends to use its popularity in Free Fire to move users into its Shopee applications.
- Other countries like Spain and Argentina have high popularity with Free Fire, making more sense for Sea Limited to expand its e-commerce platform there. At the same time, management has done a great job with its expansion in Latin America, so investors should have some faith in the current move.
Click the video below for my full thoughts and analysis.
*Stock prices used were the midday prices of Sept. 7, 2021. The video was published on Sept. 7, 2021.