Sea Ltd. stock jolted higher Tuesday after the company's posted stronger-than-expected first quarter earnings. Revenue grew nearly 30% year-over-year, though slightly below previous forecasts.
Sea reported adjusted earnings of 65 cents per share on sales of $4.84 billion for the March-ended quarter. Analysts polled by FactSet projected Sea would post adjusted earnings of 60 cents per share on sales of $4.91 billion.
Singapore-based Sea operates Shopee, 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 closed trading Tuesday up 45% on the year and 138% from 12 months ago. 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.
Those trends continued for Sea for the first three months of 2025. Earnings swung to profit from a 4-cent loss for the same period a year earlier. Revenue increased 29.6%, powered by a 28.7% increase in e-commerce revenue and a 57.6% jump in digital financial services sales.
Sea's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 136% to $946.5 million. Analysts were expecting $711 million in adjusted EBITDA prior to the report.
"We have delivered another great quarter of strong growth with improving profitability across all three businesses," Sea Ltd. Chief Executive and Chairman Forrest Li said in a news release.
On the stock market today, Sea stock gained 8.2% to close at 154.13. The stock gapped up well above a 147.73 consolidation pattern entry identified by IBD MarketSurge.
Shopee Dodges Trade Uncertainty
While some analysts previously expressed concerns about tariffs weighing on Sea's e-commerce operations, Li added in Sea's news release that the "strong start to the year gives us more confidence of achieving our full-year guidance."
The company said in March that its expected to grow gross merchandise value by about 20% in 2025 with improving profitability.
"We have not seen a material impact to our Shopee growth from the macro side," Sea President Chris Feng told analysts during a conference call Tuesday, according to a FactSet transcript. "I think part of that is because we are very much a local marketplace. Our cross-border business has been a relatively small percentage of our entire businesses. So, the cross-border trade impact from any aspect will not impact our overall business materially."
Sea announced late in 2023 that it would ramp up spending to ward off growing competitive threats to its e-commerce business from Temu and TikTok, among others. Sea's stock took a hit from the decision but it appears to have paid off. Sea's year-over-year earnings growth has accelerated for five consecutive quarters. Year-over-year sales growth has steadily accelerated from 5% in Q4 2023 to 30% or higher for three consecutive quarters.
"We expect Sea's strong competitive edges to continue supporting its earnings growth, including Shopee's strong delivery network and logistics, and Monee's ability to leverage Shopee's large user base and transaction data to effectively grow its loan book," CFRA analyst Jian Xiong Lim wrote in a client note following the Q1 report Tuesday.
Along with its earnings news, Sea announced Tuesday that it will rebrand its SeaMoney financial division to Monee.
Sea Stock Up 45% This Year
SE was the IBD Stock of the Day last Wednesday. Sea stock has a perfect 99 IBD Composite Rating, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one.
With Tuesday's gains, Sea reached its highest point since February 2022.
