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Sea: E-Commerce Growth A Positive Indicator, But Losses Deepen

Mar. 05, 2018 7:10 AM ETSea Limited (SE) Stock2 Comments
Gary Alexander profile picture
Gary Alexander


  • Sea, the Singaporean Internet company that listed in the U.S. last fall, has fallen to new lows after reporting Q4 earnings.
  • Losses continued to widen, with the company posting a staggering -241% net margin.
  • The fact that the company's Garena gaming subsidiary has just released its first proprietary game is a positive sign, but will likely be a costly investment.
  • Sea's e-commerce segment, Shopee, posted promising results, but contributed to growing losses.
  • The announced departure of the company's president also isn't adding any relief for investors worried about the company's future.

Sea Ltd. (NYSE:SE), the Singapore-based internet company, has threatened to make new lows after the stock plunged on Q4 earnings news as well as the announced departure of its group president, Nick Nash. Though the signs that Sea would be a doomed offering were evident from the beginning, the stock's recent price movements have been even more of a nail on its cross. Year to date, Sea has lost 20% (versus relatively flat for the broader S&P 500), and since the company's IPO at $15/share, it has lost nearly 30%:

Sea's major value proposition to investors (one that rang very sympathetically with investors in the early days) was that it operated a trifecta of leading Internet businesses within the fast-growing economies in Greater Southeast Asia, a group of seven countries that Sea refers to as GSEA: Singapore, Indonesia, Malaysia, Thailand, Taiwan, Vietnam, and the Philippines. Sea's overarching message to investors was that, with GSEA relatively underdeveloped in technology and internet proliferation, it could become something like the Alibaba (BABA) or Tencent (OTCPK:TCEHY) of GSEA. Tencent, indeed, is one of its backers.

But the company's issue is that the mix of platforms it operates - Garena, a gaming service that essentially is the distributor of League of Legends (which is owned by Riot Games, not Garena itself) of GSEA; Shopee, an e-commerce site, and AirPay, a PayPal (PYPL)-like online payments service - is a confusing mix, despite the synergies that Sea claims these businesses to have with each other. It's probably a service like Shopee that has the largest market potential of these three businesses (Alibaba made its name by becoming the Amazon (AMZN) of China with its Tmall site), but Shopee has barely begun to monetize its platform.

The majority of Sea's revenue base lies in

This article was written by

Gary Alexander profile picture
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

Wow, oops! 10-bagger . . .
Thanks for sharing..great article
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