Sea Limited (SE 0.29%) is home to the largest e-commerce platform in Southeast Asia, but it also operates one of the world's most successful mobile game development studios and a booming digital financial services business. The company is based in Singapore, so it's somewhat insulated from the rising global trade tensions that center around the U.S., triggered by President Donald Trump's "Liberation Day" tariffs.
Sea's business is going from strength to strength, which is why its stock has soared 52% year to date. But it's still down 57% from its all-time high set during the tech frenzy in 2021, and the company's rapid revenue growth and soaring profits could fuel a continued recovery from here.
Here's why investors should buy Sea Limited stock while it's still below its record level.
Image source: Getty Images.
A triple threat in the digital economy
Sea's e-commerce application is called Shopee. It's a hybrid business-to-consumer and consumer-to-consumer platform that facilitated 3.1 billion orders worth $28.6 billion during the first quarter of 2025 alone. Think of Shopee as the Amazon of Asia because it offers many of the same benefits to consumers including low prices and rapid delivery.
Management experimented with several new Shopee features during Q1 in Indonesia, which is one of Sea's biggest markets. It introduced "instant delivery," which allows customers to receive their Shopee orders in just a few hours, and it launched VIP memberships that offer perks like unlimited free shipping and priority customer service for a fixed monthly fee. Sea said 1 million customers have already signed up for the membership program.
The company also runs a digital financial services platform called Monee (formerly Sea Money), which has several synergies with Shopee. It lends money to Shopee sellers to help them grow their businesses, and it offers short-term buy now, pay later loans to consumers to boost their spending power. Monee's loan book topped $5.8 billion at the end of Q1, which was a whopping 75% increase from the year-ago period. The platform also had a record 28 million users, which was up 50%.
Sea's third and final business segment is digital entertainment, which is home to the Garena mobile game development studio. Garena is responsible for smash hits like Free Fire, which is the world's most successful mobile game by active users and downloads, and Call of Duty: Mobile. But this segment has been a drag on Sea's business for the last few years as engagement gradually declined across the gaming industry after peaking in 2021.
With that said, Garena's quarterly active users grew both sequentially and year over year to 661.8 million last quarter. That's still below the peak of 729.0 million, but growth is a welcome sign after three years of contractions.
Strong revenue growth and soaring profits
Sea generated $4.8 billion in total revenue during Q1, up 29.6% year over year. The e-commerce segment was the biggest contributor with Shopee revenue jumping 28.3% to $3.5 billion.
However, digital financial services was the fastest-growing part of Sea's business. Monee delivered $787.1 million in revenue, which was a whopping 57.6% increase year over year. Plus, Garena's uptick in quarterly active users also resulted in an 8.2% jump in revenue in the digital entertainment segment to $495.6 million.
Sea has a history of investing heavily in sales and marketing to drive revenue growth, even if it led to steep losses. However, management has shifted its focus to profitability over the last couple of years to build a more sustainable business. The company's total operating expenses increased only 20.0% last quarter.
As a result, more money flowed to Sea's bottom line as profit, resulting in $410.8 million of net income, a massive swing from the $23.0 million net loss it generated in the year-ago period.
Sea stock looks like a bargain, despite its recent gains
Sea stock is up 52% so far in 2025, but it's also up an eye-popping 119% over the past 12 months. Nevertheless, its price-to-sales (P/S) ratio is just 5.7, well below the average of 9.2 dating back to when the company went public in 2017:
Data by YCharts.
Valuation is a key reason why I think Sea stock can continue moving higher in the foreseeable future. But it gets better because Sea has a fortress-like balance sheet with $10.3 billion in cash, equivalents, and short-term investments on hand. Now that the company is profitable, management can confidently deploy that cash pile back into growth initiatives like marketing and product development to fuel faster top-line growth, which would make its current P/S ratio even more attractive.
Simply put, Sea stock looks like a great value right now, and good deals are getting harder to come by with the broad market climbing back toward record highs.
