What happened
Shares of Sea Limited (SE +2.38%) fell today despite the fact that an analyst raised his price target for its stock. The company -- which is involved in everything from digital entertainment, e-commerce, and financial services -- was likely sliding today as part of a major sell-off in the broader market.
Sea Limited's stock was down by 2.95% at the end of the trading day.
So what
An analyst with Bank of America's BofA Securities, Sachin Salgaonkar, raised his price target for Sea Limited's stock from $375 to $380 today, maintaining his buy rating. Generally, the share price of a company will jump when an analyst raises the price target, but there are three good reasons why that didn't happen today.
Image source: Getty Images.
First, COVID-19 cases are high as the delta variant continues to spread across the U.S. The rise in cases has caused companies to backtrack on their office reopening plans, and the pandemic has also made it difficult for restaurants, and many other businesses, to find workers.
The second reason why investors are sending stocks tumbling today is because China Evergrande Group, one of the largest property developers in China, is potentially on the brink of defaulting on some of its loans.
If the Chinese government doesn't step in to help Evergrande, investors worry that the company's risky financial state may cause those that do business with Evergrande to go out of business as well.
And finally, investors are also closely watching a two-day meeting of the Federal Reserve that begins tomorrow. The Fed is expected to discuss the potential slowing down of its monetary stimulus.
While the Fed isn't expected to say that it's easing spending right away, it may say that a pullback is on the horizon.
All of the above reasons caused the S&P 500 to fall about 2% today and pulled down many stocks, including Sea Limited, with it.
Now what
Today's broad market sell-off isn't a fun experience for investors, but selling Sea Limited just because of today's market turmoil probably isn't a good idea.
Sea Limited's business isn't any different today than it was yesterday. Today's share price drop was due to big events outside of the scope of Sea Limited's control, and investors are likely better off waiting for the stock to rebound rather than panic selling.
