Sea Limited (SE 4.34%) has a red-hot game right now in its gaming division. In this clip from "3 Minute Stocks Updates" on Motley Fool Live, recorded on Jan. 5, Motley Fool contributor Brian Feroldi discusses why the real reason to invest in the company might just be its e-commerce platform.
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Brian Feroldi: Sea Limited, ticker symbol SE. The company's most recent quarter was a thing of beauty if you look at the top line. This is a top line story right now so you should be. Third-quarter revenue was up 122% to $2.7 billion. Wow. Triple-digit growth at this size and scale is just amazing. Free Fire which is their battle royale game, remains the highest-grossing game in Southeast Asia, Latin America, and India, boasting 729 million active users, which is up 27%. Can we pause and just say that that's 10% of humanity that is playing? That is unbelievable considering I don't know anybody that's playing that game. Greener's digital revenue grew 93%. That is the gaming division. I think it's logical to assume that that's going to be a lumpy business. It's a gaming company, right? Free Fire is a red-hot game right now. Will it be for the long term? I don't know. The better reason to invest in Sea Limited is because of Shopee, which is its e-commerce platform. Their sales grew 134% to $67 billion. Its third growth kicker is Sea Money, which is growing off of a very small base, but revenue there was up 818% as Shopee continues to grow. Now the company recently struck a new deal with a company called Puregold in the Philippines, and that enables Sea Money to be accepted at 400 grocery store locations, so continuing to move offline. They also expanded their partnership with Mastercard (MA 1.33%) in Thailand. A total payment volume on that platform was up 111% and there is now 40 million Sea Money users. Now, across the business, gross profit more than doubled to $1 billion, a big number. But still, this company is very much in growth mode. Net loss actually expanded to $448 million during the quarter. However, this company has $11.8 billion in cash on its balance sheet so it can fund the losses for many more years if it chooses to. The big thing to look at with this company is just the top line and there everything is looking good. In fact, management raised its full-year revenue guidance to $5.2 billion. That's 135% growth rate. If you're a growth investor, Sea Limited is worth a look.
