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Is Sea LTD a buy?

It’s time to talk about a high flying tech name that has been hidden within the market. Here is the breakdown on $SE, otherwise known as Sea LTD.

Current Price: $167.28

52/Wk High: $176.90

52/Wk Low: $26.41

Read below for the breakdown!

Sea Limited is a diverse provider of an online platform made of three core businesses. Sea LTD operates in three core segments; Digital Entertainment, Financial Services, and E-Commerce.  

First up is Gerena, which is the company's Digital ENtertainment segment. Second up is Shopee, which is Sea Limited’s E-Commerce segment. Finally, SeaMoney is the company's Financial Services segment, which offers digital wallet services and much more.

Taking a look at where Sea LTD operates, the majority of the company's business is within South East Asia, Taiwan, and Latin America. 

Sea Limited’s most recent earnings numbers were mixed and the company reported its third miss in a row.

Sea LTD reported a Q2 EPS of $-0.68 versus the expected analysts consensus of $-0.41. On the brightside, revenues continued to grow, rising to $1.3 billion in Q2, representing a 93.45% increase since Q2 of 2019.

Further breaking down revenues, Sea Limited’s Digital Entertainment segment saw revenues of $716.2 million, representing a 61.6% increase year over year. 

Not only that, but the company's E-Commerce revenues exploded in Q2 to $510.6 million, representing 187.7% growth year over year. 

When it comes to the balance sheet the numbers could be better. When last reported, Q2, Sea Limited’s Total Debt level was $2.109 billion. Digging further, Sea Limited’s Total Liabilities was $5.750 billion and Total Assets was $6.604 billion.

Finally, it is important to note that management has built a sizable cash and short term investments level of $3.448 billion.

Given the numbers the analysts remain bullish. Currently the mean price target for Sea LTD sits at $166.82/share, representing a 1.34% gain.

The high price target sits at $200.00/share, representing a 21.50% gain, while the low price target is $140.00/share, representing a -14.95% loss.

Along with the analysts the big money is bullish as well. Currently, 70.71% of Sea LTD is owned by institutions. Top holders include Sands Capital Management, T. Rowe Price Associates, and Capital World Investors. 

Taking a look at the pricing of the stock itself, Sea LTD runs at a premium with a price to sales ratio of 27.40 times. Furthermore, Sea LTD trades at a 91.50 times price to book ratio.

Taking a look at the technicals while the stock itself has run 489.29% in the past year the stock remains bullish. According to the six-month chart, the MACD sits within upward momentum, with a range of 6.3 down to 5.8.

Furthermore, the six-month charts are also flashing an RSI of 60 and CCI of 60, both of which are neither in a good nor bad position.

Overall, the technicals are not bad and the stock continues to be strong in the upward direction. On a final note, Sea LTD does trade roughly ten points off its highs.

In short I like the growth Sea LTD is seeing and believe that the stock is a buy here on a long term basis. In the short term I expect volatility but an overall upward direction. 


Disclaimer: This is not direct financial advice, simply opinion based on independent research. 

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