Sea's Q1 2024 Earnings Report: Better-than-Expected Growth and Improved Profit Profile

Barclays's Jiong Shao raised their price target on Sea (NYSE: SE) by 2.4% from $85 to $87 on May 16, 2024. The analyst maintained their Strong Buy rating on the stock.

Shao's price target move was supported by three key points. Firstly, Sea reported "much better-than-expected" Gross Merchandise Volume (GMV) and e-commerce revenue growth for the first quarter of 2024. This indicates strong performance in the company's core businesses. Secondly, the losses in the e-commerce segment were much lower than anticipated, suggesting improved cost management. Lastly, Shopee, Sea's e-commerce platform, is once again on the verge of being profitable, highlighting the company's potential for sustained growth.

Sea's first-quarter earnings report revealed mixed results. The company reported earnings per share (EPS) of $0.21, missing the Zacks Consensus Estimate by 41.7% and falling 65.6% below Q1 2023's EPS of $0.61. However, Sea's revenue of $3.73 billion exceeded expectations, beating the Zacks Consensus Estimate by 4.8% and showing a 22.7% increase compared to the previous year's first quarter. Adjusted EBITDA for Q1 2024 was $401.1 million, down 20.9% from Q1 2023's $507.2 million. Notably, the company did not provide guidance in its press release or earnings presentation.

Chairman and CEO Forrest Li expressed satisfaction with Sea's strong performance in the first quarter, emphasizing the growth and improved profit profile across all three business segments. Li acknowledged the challenges posed by the macro environment in recent years but stated that these experiences have made the company leaner, fitter, and more adaptable. Li also outlined Sea's clear roadmap for profitable growth and expressed confidence in achieving the full-year guidance.

The analyst's price target adjustment on Sea follows their recent rating update for Alibaba Group Holding Ltd. On May 16, 2024, the analyst lowered their price target on Alibaba by -1.8%, from $109 to $107, while maintaining a Strong Buy rating. It is worth noting that 100% of top-rated analysts currently rate Sea as a Strong Buy or Buy, with no analysts regarding it as a Hold or recommending selling the stock.

Since Sea's Q1 2024 earnings report on May 14, 2024, the stock price has increased by 7.8%. However, compared to the same period last year, the stock is down by 1.4%. During this time, Sea's performance has lagged behind the S&P 500, which has experienced a decline of 28.9%.

Analyst Jiong Shao, who raised the price target on Sea, is ranked in the top 16% of Wall Street analysts by WallStreetZen. With an average return of 8.3% and a win rate of 49.3%, Shao specializes in the Real Estate and Technology sectors, among others.

Sea Limited, headquartered in Singapore, is a consumer internet company operating in the digital entertainment, e-commerce, and digital financial service sectors in Asia, Latin America, and internationally. The company's offerings include Garena, a digital entertainment platform for online games and eSports operations, as well as the Shopee e-commerce platform, which provides integrated payment and logistics infrastructure. Sea has been in operation since 2009, and its stock is listed on the New York Stock Exchange under the ticker symbol SE.

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