SE

What They Do

Sea Limited operates three integrated digital platforms across Southeast Asia and Latin America: Shopee (e-commerce marketplace), Sea Money (digital financial services), and Garena (digital entertainment/gaming). They serve over 400 million active buyers through Shopee, 20+ million first-time borrowers via Sea Money, and millions of gamers through popular titles like Free Fire. Revenue comes from marketplace commissions, advertising fees, financial services interest/fees, and gaming monetization.

Investment Thesis

Key Risks

Growth Story

The company delivered record $23B revenue (+36% YoY) in 2025, accelerating from prior year growth rates. Sea Money showed explosive 60% growth as digital lending penetrates underbanked populations, while Shopee's GMV reached $127B with improving monetization. Management expects continued double-digit growth across all segments in 2026, driven by expanding market penetration and new product launches.

Profitability Profile

Sea achieved a dramatic profitability inflection with adjusted EBITDA of $3.4B (+75% YoY) and healthy 44.7% gross margins. Shopee's EBITDA improved to $881M from just $156M in 2024, demonstrating operating leverage as the platform matures. The company generates strong free cash flow and targets 2-3% EBITDA margins for Shopee medium-term, suggesting significant margin expansion runway.

Competitive Position

Sea dominates Southeast Asian digital commerce with the region's largest e-commerce platform, integrated financial services, and popular gaming franchises. Their three-platform ecosystem creates powerful network effects — Shopee drives Sea Money adoption while Garena provides cash flow for investment. Key advantages include localized market knowledge, logistics infrastructure (SPX Express), and regulatory relationships across emerging markets.

Recent Momentum

Q4 2025 results significantly beat expectations across all metrics, with revenue up 38% YoY to $6.9B and net income jumping 73% to $411M. The stock has responded positively to proof that the company can maintain high growth while dramatically improving profitability. Recent earnings calls show management confidence in sustained momentum with aggressive expansion plans for 2026.

What Wall Street Thinks

Analysts are increasingly bullish following the profitability inflection, with many raising price targets after Q4 results. The 2026 revenue estimate of $29.4B (vs $30.4B trailing) suggests some conservatism, but EPS estimates of $3.61 (2026) and $4.74 (2027) reflect strong earnings growth expectations. The key debate centers on sustainability of current growth rates versus margin expansion priorities.

The Bottom Line

Sea Limited has successfully transitioned from a growth-at-all-costs story to a profitable, cash-generating digital ecosystem with dominant positions across Southeast Asia's fastest-growing internet markets.