Stock Story -
What Happened: Shares of e-commerce and gaming company Sea (NYNYSE:SE:SE) jumped 11.8% in the morning session after the company reported second-quarter earnings results. Sea beat analysts' revenue, and adjusted EBITDA expectations. Gross merchandise value (GMV) also came in slightly ahead. Looking ahead, the company provided encouraging guidance as it expects the Shopee eCommerce business to be adjusted EBITDA positive from the third quarter. Notably, Shopee's 2024 full-year GMV growth is expected to fall in the mid-20% range. Overall, this was a solid quarter.
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What is the market telling us: Sea's shares are quite volatile and over the last year have had moves greater than 5%. But moves this big are very rare even for Sea and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was 5 months ago, when the stock gained 16.6% on the news that the company reported fourth-quarter results that narrowly topped analysts' revenue and adjusted EBITDA expectations. Notably, the company announced the first full year of annual profit since its IPO. The company noted that despite growing competition in the e-commerce market in South East Asia, Shopee (SEA's e-commerce business) is gaining market share.
As a result, the company expects Shopee's full-year GMV growth to be in the high teens range and its adjusted EBITDA to turn positive in the second half of this year.
Despite a challenging macro environment, SeaMoney (SEA's fintech operation) recorded the first year of positive profit in 2023. Finally, Sea's game studio, Garena, recorded huge success with Free Fire, one of its published games, emerging as the most downloaded mobile game globally, according to Sensor Tower.
Overall, this was a solid quarter for Sea, given the beat on adjusted EBITDA and profitability and the reassuring outlook.
