Sea Limited SE shares are currently overvalued, as suggested by its Value Score of F.
In terms of the forward 12-month Price/Sales ratio, SE is trading at 3.68, higher than its median of 2.62 and the industry’s 3.11.
Price/Sales (F12M)
Image Source: Zacks Investment Research
SE shares have surged 27.2% in the year-to-date period, outperforming the broader Zacks Computer & Technology sector’s return of 3.5% and the Zacks Internet - Software industry’s rise of 18.4%.
SE Beats Sector, Industry
Image Source: Zacks Investment Research
SE shares have also outperformed industry peers, including HubSpot HUBS, Workday WDAY and nCino NCNO, in the year-to-date period. While HUBS and WDAY have gained 15.3% and 2.9%, NCNO shares lost 0.7% over the same time frame.
SEA Limited’s strong performance is driven by consistent top-line growth, supported by the strength of its core segments, which include e-commerce (Shopee), digital financial services (SeaMoney) and digital entertainment (Garena).
SE’s Growth Fueled by E-Commerce and Fintech Expansion
Sea Limited’s impressive performance is largely driven by substantial growth in its core businesses. These segments are pivotal to the company’s success, each addressing critical market needs.
Shopee dominates the e-commerce space with rapid gross merchandise value (GMV) growth and operational efficiency. This platform has demonstrated significant improvement, solidifying its position as a leader in Southeast Asia’s e-commerce market. This improvement is driven by growth in gross orders, highlighting Shopee’s expanding user base and enhanced engagement. Shopee’s GMV increased 25% year over year, driving significant revenue growth in the e-commerce segment.
Shopee increased its monetization by optimizing market dynamics in Southeast Asia, resulting in higher commission rates across the industry. This strategy has helped improve profitability and revenue per transaction while strengthening its position in the e-commerce market.
The third quarter was significant for Shopee, as its loan book grew 70% year over year, and 4 million first-time borrowers were added. Active loan users reached 24 million, up 60% year over year. The non-performing loan ratio was stable at 1.2%. Sea Limited engages first-time borrowers through SPayLater, offering a small credit limit and short tenure on Shopee purchases.
SPX Express enhances e-commerce by providing fast delivery and cost efficiency. In Asia, 50% of orders are delivered within two days. Improved costs in Asia and Brazil strengthen logistics. The rise of live streaming boosts the content ecosystem, supporting e-commerce growth.
SE Expands Gaming Reach With Garena’s Global Success
Sea Limited’s digital entertainment segment demonstrated significant growth potential, with total bookings increasing by more than 24% in the third quarter of 2024.
This momentum is driven by the success of Free Fire, one of the world’s leading mobile games, which consistently attracts more than 100 million daily active users. Garena Free Fire’s user base continued to grow, with a 25% year-over-year increase in new users in the third quarter of 2024.
Free Fire is one of the world’s largest mobile games and continues to captivate users with high engagement and acquisition. In October 2024, it became the first popular online game to partner with Thailand’s Zoological Park Organization, introducing the adorable baby pygmy hippo, Moo Deng, to its virtual world.
Garena recently launched Need for Speed Mobile in Taiwan, Hong Kong and Macau and has become the top racing mobile game in terms of downloads in all locations.
Garena is enhancing its partnership with Tencent to bring Delta Force, a first-person tactical shooter, to PC and mobile users across Southeast Asia, the Middle East, North Africa and Latin America. This collaboration is set to strengthen Garena’s gaming portfolio in these regions.
SE 2025 Estimate Revisions Show Upward Trend
The Zacks Consensus Estimate for 2025 revenues is pegged at $21.01 billion, indicating year-over-year growth of 24.18%.
The consensus mark for earnings is pegged at $4.05 per share, which has increased by a couple of pennies over the past 30 days. The figure calls for a year-over-year increase of 81.47%.
Sea Limited Sponsored ADR Price and Consensus
Sea Limited Sponsored ADR price-consensus-chart | Sea Limited Sponsored ADR Quote
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
What Should Investors Do With SE Stock?
Sea Limited is benefiting from strong growth in e-commerce, digital financial services, and gaming, which is driving profitability and market expansion.
However, Sea Limited is continuously facing challenges due to rising competition in e-commerce, particularly in Southeast Asia, and the need for sustained investment in logistics and live streaming. Stretched valuation also remains a concern.
Sea Limited currently carries a Zacks Rank #3 (Hold), which implies investors should wait for a more favorable entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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