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Is Sea Ltd a buy at the highs?

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: $178.50

52/Wk High: $187.75

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. 

Total Debt: $2.109 billion

Total Liabilities: $5.750 billion 

Total Assets: $6.604 billion

Cash & Short Term Inv: $3.448 billion

Taking a look at valuation, $SE has seen a major increase in its valuation based on the multiples.

Price to Sales: 30.17x

Price to Book: 100.78x

Given the numbers the analysts remain neutral. Currently the mean price target for Sea LTD sits at $169.50/share, representing a -5.02% loss.

The high price target sits at $200.00/share, representing a 12.08% gain, while the low price target is $150.00/share, representing a -15.94% loss.

The big money on the other hand is bullish. Currently, 72.52% 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 technicals, while the stock itself has run over 350% in the past year many traders remain bullish. According to the six-month chart, the MACD sits within an upward momentum, within a tight range around 3.46.

Furthermore, the six-month charts are also flashing an RSI of 56.39 and CCI of 104.82, both of which are on the high end of the scale.

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 but believe that the stock is quite high here and a pull back is needed prior to jumping in. In the short term I expect volatility and the possibility of pull back, but a long term upward trend throughout next year is likely. 


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

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