For more detailed analysis visit our website: https://www.overlookedalpha.com
Sea Limited is a tech company from Singapore, often referred to as the Amazon of South East Asia.
Barely a year ago Sea had a market cap near $200 billion. After an 82% drop in share price, the company now has an enterprise value of 28.7 billion with 7.3 billion of cash and 4.15 billion of debt.
Sea makes money in 3 main ways;
Its digital entertainment arm (Garena) distributes games like Fifa Online 3 and should see profits in the range of 1.5 billion dollars in 2022.
Its ecommerce platform Shopee is not profitable but is driving around 7 billion in revenue.
And its financial arm SeaMoney provides services like payment processing and mobile wallet products. Revenues should hit 1.2 billion or so this year.
A 7 or 8 times multiple on the games segment gets the valuation here to around $10-12 billion.
Ecommerce, meanwhile, did roughly 40% of the gross merchandise value of Shopify. Give ecommerce half the multiple of Shopify and the segment is worth around $8 billion.
The financial arm is growing at an impressive rate with 147% growth in Q3. If we give that business a multiple of 5 times revenue we get a valuation of $6 billion.
Add it all up, plus 3 billion in net cash, and we get a sum of the parts valuation of around 28 billion against the current valuation of 29bn.
In other words, Sea Limited is beginning to look a lot more reasonable at these price levels. And SEA revenue continues to grow strongly clocking over 20% a year.
On the other hand, the company still isn’t profitable. When you add back stock based compensation, the company has lost almost 3 billion dollars over the last 12 months.
And it’s SEA’s only profitable division (gaming) that is performing the worst. Adjusted ebitda for games dropped 59% in q3 and user numbers also fell by 8% The announcement by League of Legends creator Riot Games that it will no longer publish major titles through Garena is another blow.
With these questions over digital entertainment, we’d like to see a lower share price before investing in SEA. If the stock moves back below $50 it would start to look like a tempting long term trade.
But these are my personal opinions, not financial advice and I hold no position in this stock. For more detailed analysis, visit our website.
#investing #stocks #stockstobuy #stockstowatch #overlookedalpha #stockmarket #bloomberg #finance
Sea Limited is a tech company from Singapore, often referred to as the Amazon of South East Asia.
Barely a year ago Sea had a market cap near $200 billion. After an 82% drop in share price, the company now has an enterprise value of 28.7 billion with 7.3 billion of cash and 4.15 billion of debt.
Sea makes money in 3 main ways;
Its digital entertainment arm (Garena) distributes games like Fifa Online 3 and should see profits in the range of 1.5 billion dollars in 2022.
Its ecommerce platform Shopee is not profitable but is driving around 7 billion in revenue.
And its financial arm SeaMoney provides services like payment processing and mobile wallet products. Revenues should hit 1.2 billion or so this year.
A 7 or 8 times multiple on the games segment gets the valuation here to around $10-12 billion.
Ecommerce, meanwhile, did roughly 40% of the gross merchandise value of Shopify. Give ecommerce half the multiple of Shopify and the segment is worth around $8 billion.
The financial arm is growing at an impressive rate with 147% growth in Q3. If we give that business a multiple of 5 times revenue we get a valuation of $6 billion.
Add it all up, plus 3 billion in net cash, and we get a sum of the parts valuation of around 28 billion against the current valuation of 29bn.
In other words, Sea Limited is beginning to look a lot more reasonable at these price levels. And SEA revenue continues to grow strongly clocking over 20% a year.
On the other hand, the company still isn’t profitable. When you add back stock based compensation, the company has lost almost 3 billion dollars over the last 12 months.
And it’s SEA’s only profitable division (gaming) that is performing the worst. Adjusted ebitda for games dropped 59% in q3 and user numbers also fell by 8% The announcement by League of Legends creator Riot Games that it will no longer publish major titles through Garena is another blow.
With these questions over digital entertainment, we’d like to see a lower share price before investing in SEA. If the stock moves back below $50 it would start to look like a tempting long term trade.
But these are my personal opinions, not financial advice and I hold no position in this stock. For more detailed analysis, visit our website.
#investing #stocks #stockstobuy #stockstowatch #overlookedalpha #stockmarket #bloomberg #finance
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NewsTranscript
00:00 Should you buy SEE Limited stock? Ticker symbol SE.
00:03 SEE Limited is a tech company from Singapore, often referred to as the Amazon of South East Asia.
00:09 Barely a year ago, SEE had a market cap near $200 billion. After an 82% drop in share price,
00:14 the company now has an enterprise value of $28.7 billion with $7.3 billion of cash and $4.15
00:20 billion of debt. SEE makes money in three main ways. Its digital entertainment arm,
00:25 Garena, distributes games like FIFA Online free and should see profits in the range of $1.5 billion
00:31 in 2022. Its e-commerce platform, Shopee, is not profitable but is driving around $7 billion in
00:37 revenue. And its financial arm, SEE Money, provides services like payment processing
00:42 and mobile wallet products. Revenues should hit $1.2 billion or so this year.
00:47 A 7 or 8 times multiple on the game segment gets the valuation here to around $10 to $12 billion.
00:52 E-commerce meanwhile did roughly 40% of the gross merchandise value of Shopify.
00:56 So give e-commerce half the multiple of Shopify and the segment is worth around $8 billion.
01:01 The financial arm is growing at an impressive rate with 147% growth in Q3. If we give that
01:07 business a multiple of 5 times revenue, we get a valuation of around $6 billion. Add it all up,
01:12 plus $3 billion in net cash and we get a sum of the parts valuation of around $28 billion
01:17 against the current valuation of $29 billion. In other words, SEE Limited is beginning to look
01:22 a lot more reasonable at these price levels and SEE continues to grow strongly clocking
01:27 over 20% a year revenue growth. On the other hand, the company still isn't profitable. When you add
01:32 back stock based compensation, the company has lost almost $3 billion over the last 12 months.
01:37 And it's SEE's only profitable division, gaming, that is performing the worst. Adjusted EBITDA for
01:42 the gaming segment dropped 59% in Q3 and user numbers also fell by 8%. The announcement by
01:49 League of Legends creator Riot Games that it will no longer publish major titles through Garena
01:54 is another blow. With these questions over the digital entertainment segment, we'd like to see
01:58 a lower share price before investing in SEE. If the stock moves back below $50, it would start
02:03 to look like a tempting long-term trade. But these are my personal opinions, not financial advice,
02:08 and I hold no position in this stock. For more detailed analysis, visit our website.