To The Moon

Hi Tigers, welcome to ”What the Tigers Say” [Cool]

This is a weekly column planned to share the great opinion from Tigers on ‘What's Your Target Price for Sea After Earnings?’

After an earnings miss, $Sea Ltd(SE)$'s stock plummeted by 13.5%, currently resting at $36. This marks a staggering decline of over 90% from its peak.

Sea reported revenue of $3.10 billion for the second quarter, missing the estimated figure of $3.26 billion. Earnings per share came in at $0.54, again lower than the consensus of $0.66.

How do you view Sea's earnings?

What's your target price for Sea?

Below are some insights from Tiger @TigerOptions, @Lionel8383 and @Bonta. Which opinions do you agree with？

🎁Special Notes: Whoever showed up on the” What the Tigers Say” column will receive 100 Tiger Coins and an exclusive interview invitation to honor your contribution.

Click titles to read the full analysis:

1. @TigerOptions: Sea Limited's Q2 Earnings Expectations

Key Points:

• As Sea Limited prepares to unveil its Q2 earnings, the focus shifts to the significance of a strong earnings surprise in the context of market recovery. The Q1 earnings miss triggered a substantial decline in the company's stock value. However, a deeper analysis reveals that the one-time $118 million non-cash charge for goodwill impairment significantly impacted Q1 earnings, masking the company's operational improvements.

• The consensus estimate for Q2 revenues currently stands at $3.42 billion, indicating an impressive 24.04% growth from the year-ago quarter. The market's hope for a potential rally hinges on Sea Limited's ability to surpass these expectations. After the Q1 earnings setback, a robust Q2 performance that not only meets but exceeds market projections is crucial to restore investor confidence and drive positive sentiment. A strong earnings surprise could mitigate the impact of Q1's goodwill impairment charge and highlight Sea Limited's operational prowess and cost management initiatives.

• What could Happen with Strong Q2 Earnings Surprise

• Trading pattern is follows the market sentiment at the end of the day. If we see a strong Q2 earnings surprise, there could potentially be a rally from here. With a inverse head and shoulders pattern in play, this could be the strong reversal for this stock.

2. @Lionel8383: Tough times as Sea Limited remains underwater

Key Points:

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.

3. @Bonta: Adjusting option positions when under the sea

Key Points:

Entered short strangles at $45 put / $75 call pre earnings. With slight bullish position.

Thankfully, it's a strangle position, I have to salute those who are under the sea together holding sea shares. Likely will start selling sea shells by the sea shore.

The fortunate thing about strangle position, despite the plunge, I technically lose money on the put side but earn money on the call side.

I closed the call for profit, open at $0.69 and close at $0.03 for a cool $0.66 returns exclude commissions.

......

So for now, I am stuck with my put position at $45, with sharks swimming all over.

I decided to add in some shark repellent.

I sold $50 call with same expiry on 15 sept to form back another strangle.

Collecting $0.53 in premiums pre commissions. What this does, is that it reduces the impact on further drop into the sea.

However, doing so I convert a pure bullish position (naked puts) into slightly neutral and bullish position as my put is in the money and my call is out of the money.

Why this move? [Cry] cos I do not have faith that sea will recover fast. My ideal case will be by sept 15, sea is somewhere between $45 to $50. Both side of option will expire worthless.

Since under the sea, might as well enjoy the underwater scenery. [Facepalm]

Questions for you:

How do you view Sea's earnings?

What's your target price for Sea?

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⏰Duration

• 30 Aug (24pm EDT)