Sea Limited Shares Fall Amid Tariff Concerns and Market Volatility

Sea Limited's stock dropped 11% after tariff announcements affected market sentiment. However, its strong revenue growth and net income tripling present an opportunity for investors to consider buying on the dip.

Date: 05-04-2025

AI Rating: 8

Recent Challenges and Opportunities for Sea Limited

Sea Limited (NYSE: SE) recently faced significant volatility, with shares falling by 16% in one week, principally due to new tariffs introduced by the U.S. impacting its region. This sell-off is perceived by some as an overreaction that doesn't truly reflect the company's operational fundamentals.

In 2024, Sea reported an impressive revenue growth of 29% while achieving a net income that nearly tripled. The company diversified its revenue streams across its three main segments: e-commerce (Shopee), digital financial services (SeaMoney), and digital entertainment (Garena), with notable increases in revenue: 38% for Shopee, 35% for SeaMoney, and 19% for Garena.

In terms of profitability, all sectors exhibited positive adjusted EBITDA over the year, resulting in an overall increase of 66% in adjusted EBITDA. This rise showcases the efficiency and profitability of Sea's business model.

Additionally, Sea has a robust cash position with approximately $10 billion on hand, which affords the company the flexibility to invest in key growth areas, specifically its Brazilian e-commerce venture and its lending operations. In Q4, notable metrics indicated a 40% increase in monthly active users in Brazil, alongside a second consecutive quarter of break-even adjusted EBITDA.

Valuation Perspective

Currently trading at a forward P/E ratio of just 27.9 times, Sea’s stock appears attractively priced given its strong growth potential. Investors may find the current price dip an inviting opportunity to take advantage of Sea’s growth trajectory.

Stocks: SE