Sea Ltd. is the IBD Stock of the Day for Wednesday. Shares of the Southeast Asia e-commerce leader are inching toward a 147.73 consolidation pattern entry, after having already rallied 115% over the past 12 months.
Singapore-based Sea operates Shopee, which is the largest e-commerce platform in Southeast Asia and has also expanded to parts of Latin America. Other holdings include digital-payments provider SeaMoney and Garena, a global online games developer.
Sea stock has advanced 30% this year, after surging 162% in 2024. Accelerating sales growth and improved e-commerce profitability have allowed Sea to rally back after struggles in 2022 and 2023 — though the stock still sits well below record highs reached in 2021.
Sea stock gained a fraction to close at 142.53 on the stock market today.
Sea's Earnings Preview
One potential risk is that Sea's rally will soon be tested by its first-quarter earnings report. The company will report March-ended quarter results May 13.
Analysts expect Sea will report earnings of 60 cents per share on sales of $4.9 billion. That would mark 31.6% sales growth. E-commerce revenue is seen rising 32.3% to $3.7 billion.
The report should offer a look at how global trade tensions are affecting Sea's business. Sea's Shopee does not operate in the U.S. but shares still fell 10% on April 3, following President Donald Trump's "Liberation Day" tariff announcements.
Sea stock recovered in the weeks since. But some analysts still are concerned that broader trade instability could weigh on the company, particularly after Sea stock's big rally in the past 18 months.
JPMorgan analyst Ranjan Sharma downgraded his view of Sea stock to neutral from a positive overweight in an April 16 client note. Sharma recommended clients take profits from Sea after its 244% rally from a low in January 2024.
"Macro headwinds and softer consumer spending could weigh on GMV (gross merchandise value) growth and ad spending," Sharma wrote in the client note. "It could also weigh against further increases in seller commissions. Moreover, amid macro uncertainties, SeaMoney could face risks of higher credit costs and optimize lending."
Technology company Coupang, which is an e-commerce leader in South Korea, slightly missed revenue estimates with its first-quarter results, posted late Tuesday. But Coupang stock was up more than 6% in recent trading.
Latin American e-commerce leader MercadoLibre — which competes with Shopee in some markets — will report earnings later today.
Sea Stock: 99 Composite Rating
Of the 34 analysts following the stock, 28 rate Sea a buy, according to FactSet. The other six hold neutral calls.
Sea stock's Relative Strength Rating, meanwhile, remains a strong 98 out of a best-possible 99. It has the "Blue Dot" on IBD MarketSurge charts that indicates its Relative Strength line is at a new high, while the stock is forming a base.
Further, Sea stock has a perfect 99 IBD Composite Rating, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one.
Sea stock has a 21-day average true range (ATR) of 4.96%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
Given current market conditions, IBD generally suggests investors keep most of their portfolio focused on stocks with ATRs at or below 6%.
