Sea Limited falls after mixed second quarter results and suspending e-commerce revenue guidance

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Sea Limited Intrinsic Value – Sea Limited ($NYSE:SE) dropped on Tuesday after the Singapore-based technology company reported mixed second-quarter results and suspended revenue guidance for its e-commerce segment, noting the “increasing macro uncertainties.” For the period ending June 30, Sea Limited lost an adjusted $1.03 per share on $2.94B in revenue, up 28.9% year-over-year. Analysts were expecting an adjusted loss of $1.06 per share on $2.88B in revenue. The company said e-commerce revenue rose 51.4% year-over-year during the quarter to $1.7B, while gross orders totaled 2B, an increase of 41.6% year-over-year. Sea Limited said adjusted EBITDA for its e-commerce unit, Shopee, was negative $648.1M, compared to $579.8M in the year-ago period, but adjusted EBITDA loss per order improved by 21%. It is not clear how this will affect SEA market and earnings in the long term however in the short term the stock prices have taken a hit.

Market Reaction

Sea Limited, a Singapore-based company that operates an e-commerce platform and a gaming business, saw its stock fall after its second quarter results failed to meet expectations and it suspended guidance for e-commerce revenue growth. The company’s gaming business did well in the quarter, but its e-commerce business struggled. This caused the stock to open at $87.0 on Tuesday and close at $77.4. Investors are worried about the company’s ability to grow its e-commerce business, especially in light of the recent success of Alibaba in China. Sea Limited needs to show that it can compete in this space if it wants to regain investor confidence.

VI Analysis – Sea Limited Intrinsic Value

Company’s fundamentals reflect its long term potential, below analysis on SEA are made simple by VI app. Sea Limited Intrinsic Value is around $263.9, calculated by VI Line. Now SEA stock is traded at $77.4, undervalued by 71%.

Summary

The company’s strong revenue growth was driven by strong growth in its digital entertainment businesses, which offset weakness in its e-commerce business. The company attributed the weakness to macroeconomic conditions and changes in its business mix. The stock is down sharply on the news, as investors worry about the company’s ability to grow its e-commerce business in the current environment.