Sea Limited Share Price Forecast February 2022 – Time to Buy SE?
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Shares of tech conglomerate Sea Limited (NYSE: SE) are in the red today, after closing at $129.17 as of February 14th (19:59 EST). Sea Limited shares ended Monday down 18.4%. Investors learned that India is about to ban the company’s marquee mobile game — Free Fire — along with a number of other apps said to have ties to China.
Sea Limited – Technical Analysis
Sea Limited’s financial statement indicates a market cap of $72.043 billion with total assets worth $18.549 billion. Revenue for 2020 was at $4.39 billion with a profit margin of -36.98% compared to $2.18 billion in 2019.
Oscillators such as Relative Strength Index (14)(34.01), Stochastic %K (14, 3, 3)(55.93), Commodity Channel Index (20)(−144.34) and Average Directional Index (14)(34.20) are neutral. Moving averages such as Exponential Moving Average (10)(153.50), Simple Moving Average (10)(155.11), Exponential Moving Average (20)(160.14), Simple Moving Average (20)(152.95) and Exponential Moving Average (30)(170.74) are indicating a sell action.
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Recent Developments
Established in 2009, Sea Limited is a holding company for Shopee, SeaMoney, Garena and a football club Lion City Sailors FC. 2017 was a watershed moment for Garena, as it released the mobile game Free Fire, which has become an international smash hit.
It released the popular app Call of Duty: Mobile, released together with Activision. Its mobile game Free Fire, has become an international smash hit. It has maintained its status as the highest-grossing mobile game in Southeast Asia, Latin America, and India. On the other hand, Shopee has incredibly leapfrogged established competitors in the diverse region of Southeast Asia. This allowed it to become the region’s leading e-commerce platform by monthly active users and time spent.
The recent news regarding the ban in India has got a knee-jerk reaction to the news. The company has been introducing Free Fire to gamers in a number of new regions, including India and Latin America in the last few years. The company’s revenue rose 122% year over year to reach $2.7 billion, while its gross profit of $1 billion surged 148%. In this, the company’s e-commerce generated $1.3 billion and the digital entertainment (gaming) segment generated $1.1 billion.
The company has several more explosive growth avenues to try out. The company’s management is also pushing into new geographies. For instance, Shopee has already garnered the second most monthly active users in Brazil. It has also begun testing the waters in both India and Europe in the third quarter of 2021. The reason why Sea Limited has been sold off so hard in the recent interest-rate scare is due to its hefty losses.
Should You Buy SE Shares?
Sea Limited’s revenue is growing like wildfire but the shares aren’t cheap. On the other hand, the company is not profitable as it generated a net loss of $571 million in Q3. But there are some positive aspects for investors as well, such as an operating cash flow of $513 million during the quarter. This suggests that non-cash expenses including depreciation account for the bulk of its losses.
All of these make Sea Limited a high growth yet highly volatile stock which isn’t cheap. Currently, it has a valuation of 129, compared to a reasonable price-to-sales ratio between 1 and 2. But investors who have the stomach for volatility should consider buying the shares given Sea Limited’s stunning growth rate and vast opportunity.
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