Sea Limited (NYSE:SE) shares jumped nearly 6% in morning trading as investment firm Bernstein raised its earnings estimates "materially" on the Singapore tech giant, due in part to continued e-commerce gains.
Analyst Venugopal Garre nowexpects the company to generate $11.56B in revenue and $9M in net income, up from a previous view of $9.92B and a loss of $1.95B, respectively. He also tweaked estimates for 2024 as well.
"E-commerce is the core engine now, with Sea Ltd demonstrating that a low [average order value] business in an emerging market setting can be profitable," Garre wrote in an investor note, pointing to the increase in third-party take rate to 10.3%, which is expected to rise to 11.5% by the end of the year.
"Given the increasing efficiency of take rates which are delivering more profitability as against mere cost offsets earlier, gross profit margins should continue to inch up," Garre added.
Concerning the company's gaming initiatives, Garre expects that to "scale down" but potentially offer "option value for the future," while its financial technology segment is starting to improve its profitability.
Earlier this month, Sea Ltd. (SE) shares surged after the Singapore tech giant reported fourth-quarter results that blew past Wall Street expectations, led by strength in its e-commerce unit.