Sea Ltd. (SE) is showing it can keep its Shopee platform growing strong as the leader in a competitive Southeast Asia e-commerce market. That has helped Sea stock shake off a slump to close 2024 162% higher.
The big year for Sea followed a 30% slump for the Singapore-based tech company in the back half of 2023, as investors fretted over competitors like Lazada and TikTok cutting into Shopee’s market share. But Sea’s earnings results late last year show it is growing more profitable while also accelerating its sales growth. And the company told investors what they wanted to hear.
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“I’m very proud that we also improved our profitability while getting back to high growth,” Sea Chief Executive Forrest Li told analysts following the company’s third-quarter earnings report in November.
“As we continue to focus on delivering growth,” Li added, “we expect Shopee to remain profitable going forward.”
Meanwhile, Sea stock was a Covid-era darling before tumbling in 2022 and faltering in its recovery effort in 2023. Coming off its strong 2024, Sea still has a long way to go to climb back to its 2021 highs. But its mix of e-commerce growth and improving profitability have made it a favorite again on Wall Street starting in 2025.
Sea’s Turnaround Year
Along with Shopee, Sea also operates digital-payments provider SeaMoney and Garena, a global online games developer.
Sea stock’s rough 2023 helped set up its 2024 rally. The company said in its third-quarter 2023 results that it needed to ramp up investments to bolster its e-commerce business. The company, analysts noted at the time, was facing increased competition, including from TikTok, Temu and the Alibaba (BABA)-backed Lazada. Sea stock sold off on the news.
But, more than a year later, it appears the investments are paying off. Sea posted earnings of 24 cents per share for its most recent third-quarter results, compared with a loss of 26 cents per share a year earlier.
Sales jumped 31% to $4.3 billion, according to the Nov. 12 earnings release. That marked Sea’s fastest growth since the first quarter of 2022. E-commerce-related revenue grew 41% to $3.2 billion.
Shopee, meanwhile, turned a profit, on an adjusted basis, in both Asia and Brazil. The company’s e-commerce business posted adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of $34 million in the quarter, compared with a $346 million loss for the same period in 2023.
Li, Sea’s chief executive, also gave an upbeat forecast for SeaMoney and Garena. Sea stock jumped 10.5% on the report.
Analysts Are Bullish On Sea Stock
Analysts are mostly bullish on Sea stock. Of the 33 analysts following the stock, 29 rate Sea a buy, according to FactSet. Three analysts are neutral and one holds a sell call.
JPMorgan analyst Ranjan Sharma, who rates Sea at overweight, said the company’s results in 2024 have steadily made investors more confident.
“Shopee has achieved market share gains and profits while some competitors have struggled,” Sharma wrote to clients on Nov. 17. “This is in contrast to sharp increase in concerns on Shopee’s business prospects from competitive pressures after the 2Q23 result.”
Stronger investor confidence, he added, could allow Sea stock to trade at a higher multiple to its earnings, powering further gains.
Sea’s 2017 IPO
Sea was founded under the name Garena in 2009, with a focus on gaming. The firm then expanded into e-commerce and digital financial services.
The company changed its name to Sea in 2017, representing the Southeast Asia region where its business is focused.
At the time it filed for an initial public offering on the New York Stock Exchange in 2017, Sea derived the majority of its $345 million in annual sales from its gaming business. Since then, its online marketplace Shopee, founded in 2015, has grown rapidly. The online marketplace facilitated 2.8 billion orders in the third quarter of 2024 alone, worth a gross merchandise value of $25.1 billion.
Analysts forecast Sea’s e-commerce business will collect $12.2 billion in total revenue for 2024, representing three-quarters of the company’s sales.
Shopee held 48% of the e-commerce market in Southeast Asia entering 2024, according to estimates from consulting firm Momentum Works. Lazada had a 19% share and TikTok 16.3%, according to the most recent data published in July.
Wedbush analyst Scott Devitt, who rates Sea a buy, wrote in a recent client note that he expects Shopee’s margins to continue improving, particularly as its advertising business picks up steam.
But he added that the growth rate for users of Garena’s hit Free Fire game accelerated in the previous quarter, as did revenue for Sea’s digital financial services.
“The combination of improving e-commerce margins and faster growth in the more profitable gaming and financial services segments should support adjusted EBITDA growth of (more than) 50% next year, and we think the near-term margin ramp is underappreciated by (Wall) Street,” Devitt wrote to clients on Nov. 14.
Sea Stock Is Chasing 2021 Highs
Sea is still a long way from the highs near 372 it reached in late 2021.
The company was a Covid-era hot stock, gaining more than 800% from March 2020 to November 2021. But a steep sell-off in 2022 wiped out much of those gains. Sea was unprofitable and the market turned against money-losing tech firms. A focus on profitability helped Sea regain some ground in the first half of 2023, before the company’s slump to end the year.
With its strong recent year, Sea stock closed 2024 trading near its highest levels since April 2022.
Meanwhile, the company has an average target price from analysts of 124.50, according to FactSet, implying 17% upside from Sea’s closing price Dec. 31.
Sea’s rally took a breather in the final weeks of 2024, losing 7% for the month of December overall. The stock fell below its 50-day moving average on Dec. 31.
The firm’s fourth-quarter earnings will offer the next big test. Analysts project, on average, that Sea will post earnings of 34 cents per share for the December quarter. That compares with a loss of 19 cents per share in the year-earlier period. Sales are projected to increase 28% to $4.6 billion. The results are expected to be published in early March.
Sea Stock Technical Ratings
Sea’s Relative Strength Rating, meanwhile, remains a strong 96 out of a best-possible 99.
Further, Sea stock holds an IBD Composite Rating of 93 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one. The best growth stocks typically have a Composite Rating of 90 or better.
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