Sea Limited is a global consumer internet company that operates three core businesses across financial services, eCommerce, and digital entertainment. Founded in Singapore, the company’s mission is to better the lives of consumers and small businesses with technology.
Sea Limited (SE) has been one of the best-performing tech stocks over the last five years, which is why it’s gaining the attention of investors worldwide. However in recent months Sea’s stock has plummeted from its peak, so is now the time to jump on the opportunity to buy?
If you’re looking to buy growth stocks at an attractive price, here’s why SE needs to be on your radar.
A Closer Look at Sea Limited
First founded in 2009, Sea has grown into a massive business, spanning markets ranging from gaming to fintech.
Its roots are in Singapore but as the company has grown, it has done business in Taiwan, Southeast Asia, India, and Latin America. More recently, Sea also entered the United States and Europe.
The key to Sea’s success? Localized execution.
When Sea Limited moves into a new market, the company tailors and adapts its strategies, management team, and products to meet the needs of that local market. One of its tactics is to employ management teams to address local payment methods and translate language to improve customers’ experiences.
Here are three reasons to keep an eye on Sea stock.
1. Sea Is Riding Massive Trends
Two trends apply to Sea: continued digitalization in Southeast Asia and global eCommerce growth. Riding these trends could power growth for years to come, and that growth could be significant based on the nature of these trends.
For example, in Indonesia, Sea increased efforts to give local small and mid-sized enterprises the resources needed to build successful online businesses. The goal is to empower them to benefit from the opportunities presented by the digital economy. Similar efforts are being made in Malaysia, Brazil, Thailand, and Vietnam. This initiative aims to develop digital skills for young entrepreneurs.
2. Garena Continues to Be One of the World’s Leading Game Developers and Publishers
Over the years, Garena has deepened engagement with a large, global user base.
In the company’s Q3 2021 report, the numbers were impressive. After booking $1.2 billion, an increase of 29% from the year prior, EBITDA reached $715 million. Active users for the quarter were 739 million, representing a growth of 27%. The number of paying users grew to 93 million, up 43% from last year.
Sea continues to create high-quality content within the digital entertainment space while focusing on diversity. For example, Garnea’s Free Fire has a massive and highly engaged user base.
During this past year, several collaborations were made, with the mobile game Free Fire making a debut at São Paulo Fashion Week. In-game skins were brought to life. In the United States, this game remains the highest-grossing battle royale game for the third quarter in a row.
When looking at Sea’s long-term potential, its diversity has many investors interested. As Sea moves further into new markets, such as eCommerce and fintech, the growth opportunities broaden. So, while Garena fuels the vast majority of Sea’s current revenue and growth, there are plenty of other potential revenue streams as they move into the future.
Sea’s adaptability and connectivity to large global communities help set this company apart.
3. Global Exposure and Ongoing Growth
Sea has already conquered Southeast Asia with plans to expand into South America and beyond. The eCommerce platform Shopee has been working with the Brazilian market since 2019, and in 2021 entered the Mexican, Colombian, and Chilean markets.
In addition, Sea is looking for sellers in the Indian market and the Polish market as they seek European expansion.
Although SeaMoney is still relatively new, the company’s venture in the digital finance sector showcases immense potential. Currently, this company is focusing on Singapore, where SeaMoney was recently awarded its banking license. This should help the company to achieve significant growth over the next few years.
Many view Sea as a “powerhouse of growth” — for investors, few things are as sweet.
Is Now The Time To Buy?
One of the greatest red flags is that Sea is not yet profitable. Over the past few years, Sea has been aggressively building Shopee and SeaMoney. These two anticipated growth engines reported losses of $741 million and $166 million, respectively.
However, it’s worth mentioning that, historically, Sea has funded these investments with its growing (and profitable) gaming business, Garena. This leading games developer and publisher platform reported revenues of $1.2 billion in Q3 2021. The operating profit margin was 55.6%.
Overall, if you’re an investor who is prepared to hang onto Sea stock long-term, now might be the ideal time to buy. Waiting a little longer could offer an even better entry point for more conservative investors. Regardless, Sea Limited stock shows great promise in the years to come.