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$Sea Ltd(SE)$ will be releasing their earnings report on 16 May 23 pre-market. There has been a recent good surge of 6% in their stock prices as their CEO declaring 5% raises after Singapore firm turns a profit.

This send a strong signal to investors that the e-commerce and gaming business has turned the corner after years of bleeding losses.

The CEO said that Sea has reached “self-sufficiency” as its cash balance is now increasing rather than shrinking every quarter, a goal it achieved months ahead of a target set last year.

Sea reported its first-ever quarterly (Q4 2022) net profit in March, about 14 years after its founding. The company took brutal measures last year (cut about 3,500 from its workforce) to convince investors of its profit-making ability, they also retreat from major markets and slashing more than $700 million from its quarterly sales and marketing expenses.

In Sep 2022, the leadership team said they would forgo their salaries and tighten company expense policies until the company reaches self-sufficiency.

So what should we be expecting from their latest earnings report (Q1 2023) when it is released on 16 May 2023 pre-market.

Sea Ltd (SE) Earning Data

The analyst consensus has forecast the EPS to be around 0.68 which is much higher than the same quarter in 2022.

This would be the second profitable quarter, but I am more interested in how much improvement there was since they implement measures to achieve “self-sufficiency”.

I think what investors would like to know if the net profit this time will be much higher than Q4 2022 announced in March 2023.

Sea Ltd (SE) Price Target Forecast (Over period of 12 Months)

It looks like market and analyst are positive of SE future, the average price is more than $100, which is more than 20% upside from its last traded price.

If we look at the past earnings report, it seem to have a very positive effect on Sea Ltd (SE) stock price, it actually trend upwards before coming down when the company decide to implement cost cutting measure to slim its fat (of unnecessary expenses).

The most recent news of profitability and salary increase by their CEO has also move the price another 6% higher.

I would watch for more positive EPS increase and better guidance on their “self-sufficiency” how well have it works.

Sea (SE) Past EPS - Actual vs Estimate

I would expect their EPS to beat estimate and even exceed the previous quarter.

Sea Ltd (SE)’s cost-management initiatives, which include optimizing process management for customer services and reducing logistics costs, are expected to have boosted profitability.

These are some of the areas which I think would do well.

Sea Ltd (SE)’s digital financial services business by offering a diversification of overall service offerings would have benefitted as it should have succeed in reaching a broader user base.

Shopee strong collaboration with Sea Ltd (SE)’s digital financial services would have given customer much benefits through its flexible payment options, successful credit and greater affordability, hence, should improve revenue and profit.

Sea Ltd (SE) also expects to serve a large underserved community in the market. though the collaboration of digital insurance wealth management service with its e-commerce platform.

Sea Ltd (SE) Hedge Fund Holdings

Even though we are seeing a drop in the hedge fund holdings, I believe the strong earnings report should see more hedge funds loading up Sea Ltd (SE) shares again.

Hedge Funds Decreased Holdings by 15.2M Shares Last Quarter.

Sea Ltd (SE) Insider Transaction

As we noticed there has been Sell transaction in Q1 2023, but in April, we are see a Buy transaction, this could mean that there might still be some risks or challenges facing Sea Ltd (SE).

Corporate Insiders Sold Shares Worth $63.2M in the Last 3 Months.

Sea Limited has been suffering from a challenging macroeconomic environment, raging inflation, rising interest rates and a reversal of pandemic trends.

I would expect the Q1 2023 results to reflect these trends.

Sea Ltd (SE) Technical Analysis - Moving Averages

Looking at how the moving averages would move, it seem like Sea’s (SE) 10-Day exponential moving average is 81.50, while Sea’s (SE) share price is $84.77, making it a Buy.

Sea’s (SE) 100-Day exponential moving average is 73.18, while Sea’s (SE) share price is $84.77, making it a Buy.

Sea’s (SE) stock price is $84.77 and Sea’s (SE) 50-day simple moving average is 79.51, creating a Buy signal.

Sea’s (SE) stock price is $84.77 and Sea’s (SE) 100-day simple moving average is 70.10, creating a Buy signal.

Sea’s (SE) stock price is $84.77 and Sea’s (SE) 200-day simple moving average is 65.44, creating a Buy signal.

How Sea Ltd (SE) Price change before and after Earnings report release

Looking at how the price have changes before and after its earnings report, it seems like there should be a huge gap up when coming close to the announcement.

For the last 2 quarter, there have been more than 20% change in the stock price.

I would expect the price to have a slight upward movement today(15 May) - one day before the announcement.

Summary

I would be looking to enter if the price does gap up but not by huge margin, it should be in the range of $84.90 to $85.50.

There might be also a chance that it could go lower as investors are wary of how Sea Ltd (SE) have navigate through the recent global economic condition challenges.

Overall, I would expect Sea Ltd (SE) to have a higher and positive EPS and a better guidance on profit for rest of year or quarters.

Appreciate if you could share your thoughts in the comment section on what you will look out for in Sea (SE) earnings report on 16 May 23 pre-market.

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Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.