Sea Limited's (SE 4.34%) stock performance has struggled over the past five months, but there are some positive signs for a comeback. In this clip from "The Rank" on Motley Fool Live, recorded on March 21, Fool.com contributors Matt Frankel and Connor Allen look at the internet company's recent revenue numbers that show significant growth in its e-commerce and payment platform businesses.
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Matt Frankel: Sea Limited has been beaten up lately. A lot of it's just due to the recent market sell-off in growth stocks. Some of it is for a reason, they have three lines of business, the Garena gaming app which posted disappointing results in the most recent quarter, the Shopee e-commerce platform, and the SeaMoney payments platform which blew it out of the water.
Big mixed bag here. Investors don't like to see mixed bags when it makes the stock really tough to evaluate but I like Sea Limited for its e-commerce and digital payments. The video games for me are just a nice established business it already has.
Just going through some of the numbers in the fourth quarter. Sea Limited grew its revenue by 106% year over year. Over doubling its revenue year over year, and the stock is down 75 percent or 70% down from the highs. I mentioned the gaming platform was somewhat disappointing.
The e-commerce gross orders were up by 90% year over year. Ninety percent, that's pretty stellar growth. SeaMoney total payment volume was up 70% year over year to $5 billion. Which is about 1/9th of what Block (SQ 5.04%) does in terms of volume. About 1% or 2% of what PayPal (PYPL 1.96%) does. This is a very small amount of payment volume so far, so they can keep that 70% growth rate up for several years to come.
Gross profit up 146% year over year, which shows that the business is starting to become a little more efficient. They're still losing money because they are investing so much in their growth which is fine with those numbers. Over $10 billion of cash on the balance sheet to absorb any short-term losses they need to get the business where it needs to be, and 2022 guidance what's really impressive.
SeaMoney, the digital payments platform, the revenue, expect it to grow even faster than it did in 2021. They're expecting a 155% revenue growth in the payment space and 76% in the Shopee e-commerce platform. Right now the stock has a $63 billion market cap. If it realizes its potential and grows into the Amazon (AMZN 1.30%) and PayPal of Southeast Asia, I think it definitely has 10 bagger potential from here. Guys.
Connor Allen: The reason that I like Sea Limited is it's because they seem like they know where they are doing well and they stick to that. They know where and what they are doing well and they stick to that. They don't try to, I guess, it's the same reason that I like MercadoLibre (MELI 1.96%). MercadoLibre isn't trying to be the global e-commerce provider. In South America, they are very good at that and so they stick to that.
The same thing is here with Sea Limited. They tried to enter into Europe through France and it just didn't work out. They actually just pulled out of it. I like that about Sea Limited. I like the fact that they're not trying to overstep. They're not trying to get too optionable. They're not trying to expand into too many regions. They are trying to capture market share where they are. Maybe some baby steps into other regions and test the waters, see how it's doing but not trying to grow too fast.
That's why I like Sea Limited a lot. Also one of the reasons why I picked us for No. 2 is that it has been beaten up so unbelievably hard. I can't remember the share price or the market cap right now, but it's down probably 60-70% from its highs I would think at least.
