SEA is a high risk high reward kind of stock to me. I am excited that its share price has shot up recently by 36% when SEA released its 3Q22 earnings report.
Wall Street Analysts have given SEA a Moderate Buy Rating with a median target price of 160.60 in the next 12 months.
I am very impressed with Sea's management laser focus on profitability and the fact that they will not want to be paid until the company turns profitable. It shows their sincerity and alignment of interests with their shareholders.
SEA comprises of 3 business segments. They are digital entertainment under Garena, ECommerce under Shopee and Digital payments under SEA money. So far Garena has been profitable but not the other 2 segments. However SEA management has committed to turnaround the other 2 segments to be profitable in 2023.
The good thing about SEA is that they have USD 7.3 billion in their balance sheet which will give them some breathing space before they succeed in their goal to be profitable.
The bad thing is that high interest rates, slowing economic growth may thwart their goal of profitability.
SEA share price has plummeted more than 80% in the past year. At the current price level, it is trading at a huge discount. If it drops to 50, I will consider buying. I have put SEA in my watchlist. You never know, SEA maybe the next Amazon in the making.
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