Sea Limited Delivers Robust Q2 Revenue Growth, Raises Guidance

Shares of Sea Limited (SE) rose 6.12% to close at $308.27 on August 17. The Singapore-based tech conglomerate delivered second-quarter results that indicated a robust growth in revenue and gross merchandise volume. The company also raised its full-year guidance for digital entertainment and e-Commerce.

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Together with its subsidiaries, Sea Limited engages in digital entertainment and e-commerce across South East Asia and Latin America. It also offers a platform that allows people to access online mobile and pc games.

Revenue was up 158.6% year-over-year to $2.3 billion in Q2, beating consensus estimates of $1.93 billion. The increase came on the back of a 64.8% increase in bookings in the digital entertainment sector to $1.2 billion.

In other positive news, Sea Limited handled $15 billion worth of gross merchandise volume on the e-commerce front, up 87.5% from the same quarter last year. Additionally, gross orders increased 127.4% to 1.4 billion. (See Sea Limited stock charts on TipRanks)

The company also saw strong growth in the adoption of its SeaMoney offerings as mobile wallet total payment volume exceeded $4.1 billion, up 150% year-over-year. Quarterly paying users for the mobile wallet service also increased to 32.7 million.

On the negative side, Sea Limited delivered a loss of $0.61 a share, which was worse than the Street estimated loss of $0.52 a share.

Following the Q2 results, Sea Limited expects bookings for digital entertainment to range between $4.5 billion and $4.7 billion in the third quarter, signaling a 44.4% increase from the midpoint of the revised 2020 guidance. The company also expects GAAP revenue for e-commerce to range between $4.7 billion and $4.9 billion, representing a 121.5% rise from the 2020 revised guidance.

In response to the Q2 results, Stifel analyst Scott Devitt reiterated a Hold rating on the stock but raised his price target to $325 from $260, implying 5.43% upside potential to current levels.

Consensus among analysts is a Strong Buy based on 10 Buys and 1 Hold. The average Sea Limited price target of $320.80 implies 4.06% upside potential to current levels.