SE Jumps 35% in a Month: Should Investors Hold On to the Stock?
Sea Limited 's SE shares have rallied 35.5% over the past month, significantly outperforming the Zacks Computer and Technology sector's return of 15.5% and the 20.5% rise in the Zacks Internet Software industry.
SE has outperformed its industry peers, including HubSpot HUBS, Paylocity Holding PCTY and Atlassian TEAM. Over the same time frame, shares of HubSpot, Paylocity Holding and Atlassian have gained 9.8%, 6.7% and 0.4%, respectively.
The upward momentum in Sea Limited's share price reflects its outstanding first-quarter 2025 results, with revenues rising 30% year over year to $4.8 billion. Growth and profitability gains were evident across all major segments, including e-commerce (Shopee), digital financial services (Monee) and digital entertainment (Garena). Also, an impressive $410.8-million net income marked a striking comeback from a loss in the corresponding period last year, reflecting its operational strength. Despite a year-over-year upsurge of 309.5% to 86 cents per share, Sea Limited's bottom line missed the Zacks Consensus Estimate by 7.53%.
SE Growth Driven by Core Segment Strength
Shopee, Sea Limited's e-commerce platform, reported a significant turnaround in profitability in the first quarter of 2025. The segment achieved revenues of $3.5 billion, marking a 28.3% year-over-year increase. This growth was driven by a 20.5% rise in gross orders and a 21.5% increase in Gross Merchandise Value ('GMV'). Adjusted EBITDA reached $264.4 million from a prior loss of 21.7 million, driven by higher take rates, cost optimization and competitive pricing. The platform remains on track to meet its 20% full-year GMV growth target with improving profitability.
The company's digital financial services division, rebranded as Monee, demonstrated impressive growth in the first quarter of 2025. The segment reported revenues of $787.1 million, up 57.6% year over year. This rally was primarily attributed to the expansion of its consumer and SME credit business, with loans outstanding surging 76.5% to $5.8 billion.
Garena, Sea Limited's digital entertainment arm, experienced a resurgence in the first quarter of 2025, driven by the success of its flagship game, Free Fire. Bookings for the segment reached $775.4 million, a 51.4% year-over-year increase. Garena's revenue grew 8.2% year over year to $495.6 million, while adjusted EBITDA rose 56.8% to $458.2 million. The segment also saw a 32.2% increase in quarterly paying users and an 11.3% rise in quarterly active users to 661.8 million.
Garena's collaboration with Naruto Shippuden contributed to increased user engagement, bringing average daily activity close to the pandemic-era highs.
Earnings Estimate Revision for SE Trends Upward
The Zacks Consensus Estimate for SE's second-quarter 2025 revenues is pegged at $5.08 billion, indicating a 29.87% year-over-year increase.
The consensus mark for second-quarter earnings is pegged at 96 cents per share, which has been unchanged over the past 30 days. The estimate indicates a 108.7% upsurge from the figure reported in the year-ago quarter.
For 2025, the Zacks Consensus Estimate for revenues is pegged at $22.28 billion, suggesting 31.53% year-over-year growth.
The consensus mark for 2025 earnings is pegged at $3.94 per share, unchanged over the past 30 days. The estimate indicates a 134.52% jump from 2024's reported figure.
Everything Not So Rosy for SE
The launch of TikTok Shop in Brazil in May 2025 introduced a formidable competitor in the e-commerce landscape. Offering integrated shopping experiences and aggressive incentives like zero seller fees and free shipping, TikTok Shop is poised to rapidly capture market share, challenging Shopee's position in the region.
In Brazil, Shopee Live faces slow uptake due to early-stage market conditions. Shopee Live is struggling to grow in Brazil due to limited awareness of live shopping and a lack of local content creators. Sea Limited is expected to invest in building this ecosystem, which can affect profitability in the near term.
Conclusion: Hold SE Stock for Now
Sea Limited's strong first-quarter performance, marked by solid revenue growth, a return to profitability and robust segment expansion, is encouraging. However, intensifying competition is creating headwinds.
SE currently carries Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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