Sea Raises 2020 Guidance After 3Q Loss Widens; Stock Up 343% YTD

Sea Ltd. posted a 3Q loss of $0.69 per share, larger than the loss of $0.53 per share expected by analysts and the year-ago loss of $0.38 per share. The Southeast Asian gaming and e-commerce company’s 3Q sales spiked 98.7% to $1.2 billion year-over-year, missing the Street consensus of $1.4 billion.

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Sea’s (SE) 3Q digital entertainment revenues jumped 72.9% to $569 million year-on-year, while bookings jumped 109.5% during the same period. The company’s e-commerce sales surged 173.3% from the year-ago quarter to $618.7 million.

As for 2020, the company raised its guidance for both digital entertainment and e-commerce. The company expects bookings for digital entertainment to exceed $3.1 billion in 2020, compared to the previous guidance of $1.9 billion – $2.0 billion about 75.4%. E-commerce revenues plus sales incentives net-off are forecasted to exceed $2.3 billion, up from a previous guidance of $1.7 billion – $1.8 billion. (See SE stock analysis on TipRanks)

Ahead of the 3Q results, Stifel Nicolaus analyst Logan Thomas, on Nov. 13, maintained a Hold rating on the stock with a price target of $150 (15.8% downside potential). Thomas commented “Sea’s core gaming and eCommerce businesses remain leaders in their categories and are both pandemic beneficiaries and secular wallet share gainers.” The analyst added that “We think shares fairly reflect the secular opportunity balanced by the possibility there will be some reversion to offline behavior over the next twelve months in addition to more challenging optics on growth compares.”

Meanwhile, the rest of the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 6 Buys and 2 Holds. Given the year-to-date share price rally of 343.2%, the average price target stands at $174.13, implying downside potential of about 2.3% to current levels.