SE Stock Pops 12% After Sea Beats Q1 Revenue Estimates

  • Sea Limited (NYSE:SE) is up more than 15% after reporting Q1 earnings
  • The company managed to beat Q1 revenue estimates but reported slowdowns across its operations
  • Sea lowered its full-year 2022 outlook, citing challenging business conditions
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Sea Limited (NYSE:SE) is enjoying a strong day in the market after handily beating analyst expectations in its Q1 earnings call this morning. SE stock is up more than 8% on a surprisingly solid day in the market thus far.

Sea announced better-than-expected revenue growth in its fiscal first quarter, ended March 31. The Singapore-based company beat analyst projections for its mobile gaming division, Garena, which is also Sea’s most profitable service. Sea posted $1.14 billion in gaming sales, beating expectations of about $930 million. Garena was largely the torch-bearer for Sea’s earnings call, overshadowing the underperformance of its other platforms.

Forrest Li, Sea’s chairman and chief executive officer, commented on Garena’s recent hurdles:

“While Garena experienced headwinds in its growth post-COVID, we saw some preliminary positive effects from our efforts to improve user engagement in Free Fire. In particular, the monthly user trends for Free Fire began to show some early signs of stabilizing toward the end of the first quarter. While this is encouraging, the longer-term impact of reopening around Free Fire remains to be seen and we will continue to focus on user engagement and user base stabilization.”

Free Fire is Sea’s flagship mobile game and has frequently been one of the company’s largest revenue sources. From 2019 to 2021, it was the most downloaded mobile game globally and continues to offer Sea solid returns. For Q1 2022, Free Fire held up as the highest grossing mobile game in Southeast Asia and Latin America. Sea also shared plans to add new games to its offerings, across a number of different genres.

SE Stock Climbs on Mixed Quarterly Performance Across Divisions

Sea’s e-commerce brand, Shopee, faced slowdowns from its pandemic highs. Shopee saw its revenue climb 64% from last year to $1.5 billion, slightly behind estimates of $1.7 billion. During the throws of the pandemic, Shopee grew substantially as one of Southeast Asia’s biggest online shopping options. In fact, Shopee remains the top ranked shopping app by downloads globally in Q1 2022.

However, the re-opening has had iterative affects on its demand, reflected in Sea’s revised e-commerce outlook. For full-year 2022, Sea expects e-commerce sales between $8.5 billion and $9.1 billion. This is lower than prior guidance of $8.9 billion to $9.1 billion.

Meanwhile, SeaMoney, Sea’s digital financial services sector, saw its revenue more than quadruple from the same quarter last year, to $236 million. Li offered additional remarks on its non-gaming divisions:

“Shopee and SeaMoney continued to enjoy operating leverage and efficiency gain as they scale and strengthen their market leadership positions. With the significant scale, strong leadership and clear synergies achieved by both businesses in Southeast Asia and Taiwan, our consumer internet ecosystem in the region is naturally approaching a stage of long-term profitable growth.”

2022 has been a shaky year for Sea. From its November high of $357 per share, SE has shed more than 80% of its stock value, currently trading for about $81 at the time of writing. Whether Southeast Asia’s biggest company can regain last year’s momentum amid a volatile market environment remains to be seen.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines


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