Tough times as Sea Limited remains underwater
Sea Limited reported earnings before the open today on Tuesday, plunged 28% on Tuesday's trading session on missed second quarter estimates.
Earnings per share for quarter ended June 30 was $0.54, vs estimate of $0.46. Revenue for the quarter rose 5.2% year-on-year to $3.1 billion, missing estimate of $3.25 billion.
Sea down 54.9% in the past 1 year
Garena down 41.2% y/y
It's Digital Entertainment segment, Garena, saw a steep decline in segmented revenue of $529.39 million, down 41.2% from June 2022 quarter which had a segmented revenue of $900.25 million.
Bookings for digital entertainment continued to decline, down 38.2% year-on-year. Bookings continue on a downtrend, since hitting a peak in the third quarter of 2021.
Garena is one of the stronger segments of Sea Limited, as it's operating margins are much wider compared to its e-commerce segment.
Sea Limited had a fantastic run in 2020 & 2021, when the pandemic fueled e-commerce & digital entertainment, driving its stock price to a high of over $360 per share in October 2021.
Today, it's stock has plunged more than 84% since its peak.
What if you are an investor in Sea?
If you are an existing shareholder of Sea, you should re-evaluate the business. Is the business able to turn around its fortunes in the next 1 year to 2 years?
Are consumer spending trends especially in digital entertainment going to change, will it ever drive its bookings and get back it's quarterly paying users?
E-commerce remains a huge challenge as it faces several strong competitors in Amazon & Lazada in the South East Asia region. There are less incentives for using Shopee these days, as the coins and vouchers have started to disappear.
The last thing to note is that Sea Limited is not yet net income positive on an annual basis, although for the last three quarters they have returned a positive net income, and might continue to suffer losses. The investor might want to consider realising a loss on the investment and look around for businesses that have consistently returned increasing net income, increasing total revenues and increasing free cash flow for at least five years.
$Sea Ltd(SE)$Modify on 2023-08-16 10:03
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
This will be close to $40 or below in two months as the overall market has begun its descend. Would be a good buying opportunity below $40. Good luck!
Don't understand why this is dropping after report.... I will continue to gather more as south east asia will continue to outpace the world in growth... pretty dumbfouned at the pre-market move... oh well, more time to accumulate!
What happened? Dropped so much!
Really sorry for the investors. RIP 🕯️
The future looks bright for Sea Ltd so I'll keep buying.
One of the truly great bubble stocks