Why Sea Limited Floated Above the Market on Monday

An analyst at a prominent investment bank gives the thumbs-up to the company’s shares.

An analyst at a prominent investment bank gives the thumbs-up to the company’s shares.

What happened

Sea Limited ( SE -0.43% ) stock had a down day on Monday, but it still beat the performance of the S&P 500 index. The former lost 0.4% of its value across the trading session, but that was smooth sailing compared to the index’s 1.7% drop. At least some of this was due to a high-profile investment bank’s effective endorsement of the stock.

So what

On Sunday, Pang Vittayaamnuakoon of Goldman Sachs ( GS -0.20% ) initiated coverage on Sea stock with a $196-per-share price target and a buy recommendation. This puts Vittayaamnuakoon and Goldman firmly in the bull camp, as that level is a rich 72% above the stock’s most recent closing price.

Person at a desk using a PC and looking pleased.

Image source: Getty Images.

The reasons for this optimism weren’t immediately clear, but as a whole, the analysts tracking Sea shares are expecting far better days for the Singapore-based tech company. On average, they feel that the company will continue to expand its business, with nearly 37% year-over-year growth for full-year 2022 and nearly the same rate in 2023.

Although those prognosticators collectively believe Sea’s net loss will deepen this year (to $4.71 per share from $3.84), they’re expecting a recovery in 2023. That year should see only a $3.14-per-share deficit. 

Now what

Like an ocean liner on rough water, Sea stock can be very up-and-down in price. Recently, this hasn’t been helped by a tough fourth quarter. The company posted a net loss far deeper than expected, and its Shopee e-commerce division’s retreat from both France and India — two rather juicy consumer markets.

Yet the company is still growing (yes, the fourth-quarter bottom line was ugly, but the company did manage to more than double its revenue), and it’s early days for some of its services. In my view, Vittayaamnuakoon is right to be bullish on the stock, which has the potential to zoom well higher if Sea can find a way to cut its losses substantially.


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