Is Sea Limited The Next Amazon?
As one of the few trillion-dollar companies in history, many investors and traders wish nothing more than to be able to go back in time a decade to when Amazon stock sold for under $200 a share. As a matter of fact, it would be even better to go back two decades to when the company’s stock was barely over $10 a share.
With a current price per share hovering in the $3,000 – $4,000 range, the largest gains in Amazon are now a thing of the past. Certainly, the company could double or even triple over the coming years but the 10x returns in a short time period are long gone. So what stocks do possess this extraordinary potential?
Sea Limited is one such company. A tech conglomerate and holding company based in Singapore, Sea Limited has been around since 2009 and has since spread into several highly profitable industries such as finance, eCommerce, and entertainment, among others. But Sea Limited isn’t being named as the next Amazon simply because it dabbles in eCommerce and entertainment — the company also has the financials and the growth potential to end up on the same level as Amazon and the other trillion-dollar companies Facebook, Microsoft, Apple, and Alphabet. With this in mind, let’s look at all Sea Limited has going for it and how this might result in a trillion-dollar valuation one day.
Sea Limited Earnings Results
First off, let’s take a look at Sea Limited’s most recent quarterly earnings results — these numbers come from the company’s third quarter earnings report for 2021, covering the period that ended on September 30.
Overall, Sea Limited saw remarkable triple-digit growth in both the company’s GAAP revenue and its gross profit: the former rose 122% year-over-year to $2.7 billion, while the latter increased a total of 148 percent year-over-year to a whopping $1 billion. This substantial growth is due in large part to its digital entertainment arm.
Sea Limited’s digital entertainment division brought in over $1.2 billion in bookings for the quarter. It also saw an increase in quarterly active users for Q3, which grew 27 percent to 729 million, and an increase in quarterly paying users for Q3, which grew 43 percent to 93 million.
In addition to this, Sea Limited’s e-commerce arm saw $1.7 in gross orders and a GAAP revenue of $1.5 billion. There were also more than 39 million quarterly paying users with $4.6 billion in total payment volume for its mobile wallet service.
Looking forward to Q4 and the company’s annual results, Sea Limited expects to see between $5 and $5.2 billion in total eCommerce GAAP revenue.
Sea Limited and Shopee
Now that there’s an understanding of Sea Limited’s financials, it’s worth examining all the company’s big earners and how that plays into the company’s growth potential.
First and foremost is Shopee, the company’s eCommerce platform. Shopee has spent much of 2021 expanding its reach across several continents, hitting South America and much of Asia and finding great success across the board.
As of late, Shopee has shown that there’s such a high demand for eCommerce platforms outside of the U.S. — especially in Latin America, which has shown the fastest growth in digital shoppers throughout 2021. This translates directly into excellent earnings for the company and its strategic rollout of its eCommerce platform.
Sea Limited and Mobile Games
Looking beyond Shopee, Sea Limited has also seen incredible success with its digital entertainment and game development work under the name Garena.
Through Garena, Sea Limited was responsible for the most-downloaded mobile game of 2019 and 2020: Free Fire. This battle royale game earns Sea Limited nearly $2 million a day and has brought in over two billion dollars since its launch.
This makes Garena one of the globe’s most sought-after game developers around, which bodes quite well for both the future of the game developer and Sea Limited on the whole. Mobile gamers the world over will be eager to see — and to buy — whatever comes next.
Sea Limited and SeaMoney
Other New Business Ventures For Sea Limited
While these three aspects of Sea Limited are undoubtedly the biggest earners for the company, they aren’t the only ones the company has going for it.
Sea Limited is also the owner of Lion City Sailors Football Club, one of the most profitable and most popular soccer clubs in all of Singapore. The company has also recently announced Sea Capital, an investing group with $1 billion in funding that aims to strategically invest on behalf of Sea Limited.
There’s also Sea AI Labs, which hopes to develop new applications that utilize artificial intelligence.
Sea Limited’s Stock Price Forecast
Taking all of these factors into consideration, let’s take a look at where financial analysts expect to see Sea Limited’s stock price to head in the next twelve months. On the bearish side of things, analysts predict a rise from the current price per share of under $315 to a price of $350 per share. On the bullish side, analysts can see Sea Limited stock reaching $460 per share.
Looking straight down the middle at the median prediction of $400 per share, it’s clear to see that no matter what, Sea Limited’s stock is practically destined to increase over the next year and beyond. It’s rare to see bulls and bears on more or less the same page like this, but Sea Limited has the growth potential to make it happen.
The Bottom Line: Is Sea Limited The Next Amazon?
When all of this is taken into consideration, it’s clear to see Sea Limited is already the next Amazon of Asia and has the potential to be a real contender alongside Amazon globally in the coming years. This won’t happen overnight, of course, but looking a decade ahead, it wouldn’t be unrealistic to expect to see Sea Limited making significant upward growth year over year over year from here on out — just as the company has been doing for years now.
As Sea Limited continues to expand across the globe — the company is working to expand to India and recently hit Europe when it expanded to Poland, which will be a true indicator of how well Sea Limited could perform across the rest of the continent and into North America — it’s worth paying attention to its steady and dependable growth. It’s not a bad idea to get in on the ground level of a company that has the potential to really boom in the decades ahead.
