Sea Ltd (SE) stock has become the fastest-growing high-cap investment on Wall Street after posting impressive 18 months gains of 880%.
When debating stocks, most seasoned Wall Street investors would refer you to the tech giants FAANG (Facebook, Amazon, Apple, Netflix, Alphabet) for a historic out-performing of the S&P 500 index. An investor operating from the financial hub of Tokyo may suggest adding the collection of Chinese tech stocks, otherwise known as ‘BAT’ (Baidu, Alibaba, Tencent) to your portfolio. However, 18 months ago, not many would have directed you to the e-commerce and financial service Sea Ltd (NYSE: SE) – which has seen gains of 880% in that timeframe and over 250% this year alone. Today Sea stock is one of the most interesting ones to watch.
Sea Ltd was founded by South Asian entrepreneur and CEO Forrest Li in 2009. Initially known as ‘Garena’, the company set out to design a communication platform for video gamers in the South Asian market. After witnessing the rise of the gaming sector in the early 2010’s, they widened their services to include developing and publishing games for industry third-parties.
Public Listing of Sea Stock
Now renamed Sea Ltd, the company went public with the financial and mentorship backing of fellow internet company Tencent in 2017. The latter own 25.6% of the total Sea shares. After finding stagnated success in their years of gaming development, Sea took the leap to become a tri-sector business operating in the markets of gaming, e-commerce and financial services.
Their first venture of this kind into gaming – released in September 2017 – was a battle royale multiplayer mobile-game called Free Fire. In the years that followed, Free Fire received a multitude of accolades in the gaming community including most downloaded mobile game of 2019 and “Best Popular Vote Game” by the Google Play Store in the same year. After registering a remarkable 80 million daily active users across a span of 130 countries, the game truly announced Sea’s profile as a serious contender in the tech market.
The company saw similar success with their e-commerce service. In the final quarter of 2019, Shopee overtook competitor Alibaba’s service Lazada to become the most popular downloaded app in Southeast Asia and Taiwan in 2019. The final side of their business triangle – financial services – titled Sea Money has also seen a positive increase in quarter by quarter growth this year.
“We don’t like to think too much about our success or how we got here,” says Forrest Li, CEO on Sea’s bullish stock price. “It doesn’t matter if the environment is good or bad. It doesn’t change a company or a person.”
Impact of the Pandemic
As a result of this tri-sector success, the Sea stock topped previous all-time-highs of around $18 in Q1 2019, closing the year above $40 and establishing the foundation of the parabolic bullish run we witness today.
Whilst many small companies have fallen under, the global pandemic has positively impacted the user figures and sales revenue of many of the giant tech companies, Amazon being the most well-discussed on that issue.
According to Sea’s financial report of Q1 2020, a total revenue gain of 57.9% was recorded on a YOY metric. This success reflected in the stock performance, gaining 170% in the quarter (Q2) of this year. Amongst the three sides of the business, financial services recorded the highest revenue increase with a 282.1% YOY Q1 change, e-commerce came in second with a 110.5% gain and lastly gaming with 30.3%.
The company still has overall net losses of $1.46 billion according to last year’s earnings report. Despite this, Wall Street investors are gaining an interest in the stock, as well as an exclusive hedge fund investment company Tao Value who are touting Sea stock as their top position going into Q3.
Sea Ltd is now the biggest company in Southeast Asia with a market value of $65 billion overtaking DBS Group Holdings Ltd and PT Bank Central Asia. It has a competitive advantage established over the ‘BAT’ companies and only looks to be increasing it market value.
As for the Sea stock price, which currently sits just shy of $146.15 (+0.47% in the pre-market), the aftermath of the pandemic will certainly play a role in for the remainder of 2020, but for now it continues to post all-time-highs.