Why Sea Restricted Inventory Was Climbing Immediately


What happened

Shares of Sea Limited (NYSE: SE) are up today after the Southeast Asian e-commerce and digital gaming company reported first-quarter earnings this morning. The stock actually opened lower initially when Sea missed analyst estimates, but investors rushed to sell off and bid the stock higher in what was a strong report for the most part.

As of 1:02 p.m. EDT, shares rose 2.9%.

Image source: Sea Limited.

so what

Revenue for the quarter rose 146.7% to $ 1.76 billion, although that wasn’t up to an estimate of $ 1.81 billion. Sea’s digital entertainment division, known as Garena, grew 117% to $ 1.1 billion, while e-commerce sales grew 250.4% to $ 922.3 million and grew strongly in the market and in direct sales continued to skyrocket.

Garena continues to be the bottom line driver, with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in this business unit up 140% to $ 717.3 million. At Shopee, the e-commerce business, adjusted EBITDA loss increased from $ 264.1 million to $ 412.9 million, although the loss per order decreased from $ 0.61 to $ 0.38, which shows that the business is making headway towards breakeven.

The bottom line was that adjusted loss per share rose from $ 0.52 to $ 0.62, which was worse than the estimates of $ 0.46.

Sea Money, the smaller digital payments segment and the third part of Sea’s business, more than triple the payment volume to $ 3.4 billion in the quarter. It now has 26.1 million quarterly paying users.

Commenting on the call for results, CEO Forrest Li said:

We look forward to starting 2021 with good results. Our results for the first quarter show continued high growth in all business areas. Despite the recovery in offline sales in our region since the second half of 2020, our strong performance in terms of growth and user engagement shows that digital adoption is still growing healthily as the communities in which we operate continue take advantage of the online lifestyle.

What now

Looking ahead, Sea stuck to its forecast for the year, calling for digital entertainment bookings of $ 4.3 billion to $ 4.5 billion and e-commerce revenue of $ 4.5 billion to 4.7 billion U.S. dollar.

The company’s Free Fire game has helped fuel growth in e-commerce. The game was a huge hit in Latin America, Southeast Asia and India, where it has established itself as the leading provider of mobile games.

Sea was a big winner during the pandemic, but the stock has pulled back in recent months as growth stocks appear to be digesting those gains. However, the first quarter report shows that the tech company continues to be a growth juggernaut.

This article represents the opinion of the author who may disagree with the “official” referral position of a Motley Fool Premium Consulting Service. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.


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