Sea Ltd. is the IBD Stock of the Day for Thursday. Shares of the Southeast Asia e-commerce leader are holding within a buy zone after Sea's Q2 results sent Sea stock skyward earlier this month.
Singapore-based Sea owns Shopee, the largest e-commerce platform in Southeast Asia. The company also operates in parts of Latin America. Other holdings include digital payment provider SeaMoney and Garena, a global online game developer.
Sea stock has advanced 67% this year, after surging 162% in 2024. Strong e-commerce growth has powered a big jump in profitability for the tech firm. That has helped Sea stock shake off a slump that followed its Covid-era surge.
A strong earnings report on Aug. 12 helped Sea stock keep the bears at bay. Shares gained 19% following the report.
On the stock market today, Sea gained a fraction to close at 179.60. Sea stock broke out above a 172.65 consolidation pattern buy point following its earnings report, according to IBD MarketSurge. The stock is within a 5% buy zone from that entry.
Sea Q2 Revenue Jumps 38%
Sea impressed investors with a 38% increase in revenue to $5.26 billion for its June-ended Q2. That beat estimates of $4.96 billion. It was also its strongest overall revenue growth since the first quarter of 2022.
E-commerce revenue makes up the majority of the company's sales. Revenue from the segment jumped 34% to $3.8 billion in Q2.
Roughly two years ago, Sea stock took a big hit when the company warned investors it needed to ramp up investments to better position Shopee against challengers. New rivals included TikTok and PDD Holdings' Temu. Shares slumped further when Sea's sales growth slowed to 5% for back-to-back quarters to close out 2023.
But Sea is back to growing rapidly. Its June results marked four straight quarters of growth above 30%.
Meanwhile, analysts project that Sea will post earnings of $3.14 per share for the full year, up 324% on a per-share basis from the company's 2024 earnings.
Sea stock also broke out following its first-quarter results in May.
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Wall Street's View On Sea Stock
Analysts are mostly bullish on Sea's prospects to keep rising. Of the 34 analysts following the stock, 27 rate Sea stock a buy, according to FactSet. The other seven analysts hold a neutral stance.
Wedbush analyst Scott Devitt views Sea stock as a buy.
"While we are watching the evolving competitive environment and the company's ability to drive continued expansion of its credit products, we think the current valuation is compelling for a dominant regional e-commerce player set to grow gross merchandise value roughly 25% this year," Devitt wrote to clients following Sea's report.
Sea shares had pulled back in the weeks ahead of its Q2 report, including a 7% slide on July 21 that followed news the company would raise fees for sellers in Indonesia. Analysts are also watching how tariffs impact the markets where Sea operates. Shares of Sea fell more than 2% the day President Donald Trump announced steep tariffs on Brazil last month.
CFRA analyst Jian Xiong Lim wrote to clients last week that he expects Sea's "strong competitive edges to continue supporting its earnings growth."
Sea Stock Leading Strong Internet Retail Group
Meanwhile, Sea stock holds a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one.
Sea's Relative Strength Rating is down slightly from three months ago but remains a strong 94 out of 99.
E-commerce stocks have outperformed this year, despite the tariff uncertainty. The 59-stock Retail-Internet industry group tracked by IBD ranks third among 197 industry groups, based on six-month price performance. The overall group is up 35% year to date.
Sea's strong IBD Composite Rating places it among the top stocks in that group. It trails only food-ordering platform Olo, whose shares recently surged after it announced it would be acquired by private equity firm Thoma Bravo.
