To The Moon

🌟🌟🌟$Sea Ltd(SE)$  has just posted a better than expected Q423 earnings today.  Sea's share price has jumped 5.5% today and in the past 5 days it has popped 17%.  So far, Sea is up 40% year todate but in the past year it is still down almost 18%.

Sea is a leading global consumer internet company founded in Singapore with 3 core business segments.  They are Shopee which is Sea's ECommerce business, Garena which provides digital entertainment and Sea Money which provides digital payments and financial services.

For Q423 there was a 19 cents per share loss as compared to 72 cents per share year over year.  Sales for Q423 increased 5% year over year. 

Sea reported that its Total GAAP revenue was USD 13.1 billion, up 4.9% year on year. Total gross profit was USD 5.8 billion, up 12.5% year on year.  Total net income was USD 162.7 million as compared to total net loss of - USD 1.7 billion for 2022.  Total adjusted EBITDA was USD 1.2 billion as compared to -USD 878.1 million for the full year of 2022.

Shopee's GAAP revenue was USD 9 billion, up 23.5% year on year.  GAAP revenue included USD 7.9 billion of GAAP market place revenue, up 27.4% year on year.  Adjusted EBITDA was - USD 213.8 million, as compared to - USD 1.7 billion for 2022.  Gross orders was 8.2 million up 8.8% year on year.  Gross Merchandise Volume (GMV) was USD 78.5 billion, up 6.8%  year on year.

Sea Money was the best performing segment of the 3 businesses with GAAP revenue at USD 1.8 billion, up 44% year on year.  Adjusted EBITDA was USD 550.1 million as compared to -USD 228.6 million for 2022.

However Garena GAAP revenue dropped to USD 2.2 billion versus USD 3.9 billion for the full year in 2022.  Bookings were USD 1.8 billion compared to USD 2.8 billion for 2022.  Adjusted EBITDA was USD 920.9 billion as compared to USD 1.3 billion for 2022.  Adjusted EBITDA represented 50.9% of bookings as compared to 47.7% for the full year of 2022.

CEO Forrest Li said that despite an environment of intensified competition in South East Asia, SEA had a meaningful gain in market share in 2023 and have solidified Shopee's market share in the region with further intention to do so in 2024.

SEA expects Shopee's full year GMV to grow in the "high teens range" for 2024.  Forrest Li  also said that he expects Shopee's adjusted EBITDA to turn positive in the second half of 2024.

Even though Garena's sales fell 46% to USD 511 million for 4Q23, Forrest Li said that Garena's Free Fire mobile game was the most downloaded globally in 2023 according to research company Sensor Tower. 

Wall Street Analysts are bullish on SEA, with a Buy rating, Target price of USD 68.14, an upside potential of 26%.  Jefferies have just increased Sea's price target to USD 82 citing that SEA has a positive adjustment in its financial outlook. 

Despite the competition that SEA faces in the region especially from TikTok, $Alibaba(BABA)$   Lazada and $Pinduoduo Inc.(PDD)$  Temu, I am amazed that SEA is still able to navigate its way to profitability in 2023.  Kudos to the strong leadership of Forrest Li.  

The ECommerce market in Southeast Asia is huge.  In 2022 it was USD 131 billion and this is forecasted to increase significantly to USD 211 billion by 2025.  While there maybe challenges ahead for SEA, it can look to future exponential growth in the region with the quiet confidence and optimism. 

Is it time to buy SEA?  Yes, I believe it is on the right track going forward.    However in the short term SEA 's share price may experience volatility but in the long term, SEA will do well. 

As the late Charlie Munger likes to say "The Big Money is not in the Buying and Selling but in the Waiting". 

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