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Sea Could Sink When IPO Lockup Expires

Apr. 11, 2018 10:38 AM ETSea Limited (SE)11 Comments
Don Dion profile picture
Don Dion


  • When SE's IPO lockup period expires on April 18th, 2018, pre-IPO shareholders and company insiders can sell large blocks of currently-restricted shares for the first time.
  • Just 15% of shares outstanding are currently trading.
  • A flood of shares into the secondary market could cause a sharp, short-term decline in SE's share price.

The 180-day lockup period for Sea Limited (NYSE:SE) expires on April 18, 2018. When this six month period concludes, the company’s pre-IPO shareholders will have the ability to sell their large blocks of currently-restricted shares. The potential for an increase in the volume of shares traded on the secondary market could negatively impact the stock price of SEA.

(Source: F-1/A)

This group currently-restricted shareholders includes fourteen individuals and three corporate entities.

(Source: F-1/A)

Currently SEA trades in the $10-$11 range, significantly lower than its IPO price of $15. Shares of Sea Limited started off well by closing on its first day of trading in the secondary market at $16.26. However, the shares have since been in decline.

Business Overview: Internet Platform Provider in Greater Southeast Asia

Sea Limited is a provider of internet platform services in Greater Southeast Asia. It focuses on ecommerce, digital entertainment, and digital financial services across three primary platforms. The company offers financial services to businesses and individuals through its AirPay mobile app, which includes payment and e-wallet services. The AirPay app also offers services through computers as well as mobile devices, and the app has features for payment processing services through Shopee, another platform the company offers.

(Source: F-1/A)

Sea Limited also has the Garena digital entertainment platform for gaming and offering eSports operations. Garena gives users access to online gaming, social connections, and live streaming of entertainment content. The Shopee platform is an ecommerce operation that provides a third-party marketplace through its website and mobile app.

Sea Limited’s digital entertainment revenue grew at a 45.4 percent CAGR from 2014 to 2016. The AirPay platform has seen revenue grow at 26.1 percent CAGR between early 2015 to the second quarter of 2017. As of June 2017, Sea Limited had nearly 4,500 employees across Greater Southeast Asia including 1,070

This article was written by

Don Dion profile picture
Don Dion is the CEO of Inland Management, a company focused on acquiring, subdividing, developing and marketing large tracts of land on the fringes of major metropolitan markets. Inland Management has sold land in all 48 contiguous states totaling billions of dollars. As CEO, Don is responsible for helping to maintain and enhance the firm’s strong financial position and identifying opportunities for growth. In addition to his role at Inland Management, Don Dion is the Chief Investment Officer of DRD Investments, LLC. Based in Naples, FL. and Williamstown, MA., DRD Investments is a family office focused on managing a long/short hedge fund, real estate, venture capital and various other financial assets for the Dion family. Don also serves as the trustee of the Dion Family Foundation, which focuses on helping individuals with tuition assistance at Catholic Institutions for grammar school, high school, and college education. The foundation also helps individuals by supporting Massachusetts General Hospital. Don is on two leadership boards and advisory committees at Massachusetts General Hospital and the Home Base Program (a partnership between Mass General and the Red Sox Foundation). He consults with Saint Dominic's Academy and serves as a trustee of Saint Michael’s College. Previously, Don was the founder and CEO of Dion Money Management, a fee-based investment advisory firm for affluent individuals, families and non-profit organizations. Founded in 1996 and based in Williamstown, MA. and Naples, FL., Dion Money Management managed approximately one billion in assets for clients in 49 states and 11 countries. While at Dion Money Management, Don was responsible for setting investment policy, creating custom portfolios, and overseeing the performance of client accounts. Don sold the firm to NYC-based Focus Financial Partners (FOCS) on September 1, 2007 and no longer manages money for other families or institutions. Don remains a shareholder of Focus Financial Partners (FOCS). Don is also the retired publisher of the Fidelity Independent Adviser family of newsletters, which provided a broad range of investor commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With nearly 100 thousand subscribers in the United States and 29 other countries, Fidelity Independent Adviser published two monthly newsletters and one weekly newsletter. The flagship publication, Fidelity Independent Adviser, was published monthly for 16 years and reached over 60,000 subscribers. In 2011 Don and his daughter Carolyn co-authored the Ultimate Guide to ETFs, available on Amazon.com. Prior to founding Dion Money Management, Don co-founded Litchfield Financial Corp. (LTCH) with Summit Partners. Don served as Chairman and CEO of Litchfield, which was listed on the Nasdaq in 1992 and acquired by Textron Corp. (TXT) in 1999. Don was also the Executive Vice President, CFO and General Counsel for Patten Corporation (BGX) from 1986 to 1988, where he played a critical role in the company’s successful initial public offering on the New York Stock Exchange. From 1983 to 1985, Don was a corporate lawyer with the Boston Law Firm of Warner and Stackpole. Before joining Warner and Stackpole, Don worked as a C.P.A. for Ernst and Young from 1979 to 1983. Don graduated with honors from Saint Michael’s College in 1976 with a B.S. degree in Economics and Business Administration. He received his J.D. from the University of Maine Law School in 1979 and his LL.M. from Boston University Law School in 1982. Don can be reached at donalddion@gmail.com

Analyst’s Disclosure: I am/we are short SE. 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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