@Mrzorro：$SEA(SEA)$ Is Passing Through the Storm! It might just be possible to get U.S. investors to pile back into tech stocks if companies were to brutally cut costs and give priority to profits over everything else. Case in point: Singapore's Sea Ltd. The Asian consumer internet company's beaten-down shares surfed a wave of enthusiasm on Tuesday after it narrowed losses substantially during the third quarter, defying market expectations. They surged 36% in New York trading after having been down 87% from their 52-week high. Sea's net loss for the quarter, excluding share-based compensation, narrowed to $369.5 million from $450.1 million in the year-ago period as cash burn in its e-commerce business slowed. Revenue was up 17.4%. The company is working toward breaking even on the basis of adjusted earnings before interest, tax, depreciation and amortization in its e-commerce business by the end of 2023, helped by better take rates and scaled-back marketing expenses. It is Sea's largest segment, followed by gaming. Group Chief Executive Forrest Li said Sea has entirely shifted its focus from growth to achieving self-sufficiency and profitability as soon as possible without relying on external funding. The company has been walking this talk for a few quarters now: It has slashed jobs, closed its e-commerce operations in India and some European and Latin American markets and stopped making equity investments. Sea's Asian tech peers Grab Holdings and GoTo also have seen better days, struggling in an environment of rising interest rates, inflation and slowing growth, and have shifted their focus to profitability. The script is similar to Silicon Valley's draconian new approach to stem the slide in market valuations: slashing costs to deal with slowing growth. Despite the risk of a global recession in 2023, Sea's stock probably could see some further upside as the company accelerates its path to profitability and if it succeeds in reversing its cash burn by the end of next year. It currently trades at only 2.46 times projected sales for the next 12 months, according to FactSet, down from a multiple of 8.58 at the beginning of the year and as high as 18 in February 2021. The average analyst rating on the stock is overweight. A fly in the ointment could be Sea's profitable gaming business continuing to see moderation in user spending as the pandemic boost keeps waning. The unit, which generates 28% of group revenue, is under pressure due to excessive reliance on its game "Free Fire." Bernstein analysts Venugopal Garre and Ankit Agrawal say Sea has demonstrated its ability to substantially reduce e-commerce losses through increased efforts to monetize the platform and cost reductions and they expect "self-sufficiency" to remain a keyword at the company with continued quarterly improvement. After years of burning cash in a fight for market share, Sea's new reality is sobering. The faster internet companies accept it, the better. Another sector to be watch is semiconductor share such as $Taiwan Semiconductor Manufacturing(TSM)$ $NVIDIA Corp(NVDA)$ $AMD(AMD)$ @TigerStars @Daily_Discussion 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.
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