Sea Limited (NYSE: SE) is a $179 billion company based in Singapore and operates three core businesses across Southeast Asia and Latin America — Shopee in e-commerce, SeaMoney in digital financial services, and Garena in digital entertainment and gaming. It also has subsidiary businesses in Lion City Sailors FC, a privatized soccer club, and Airpay, a digital financial services platform used by LinkedIn.
Over the last 12 months, the stock has gained over 122% as the company is thriving due to the increased demand for online shopping and gaming which has continued on from the pandemic. These parts of its businesses consequently rely on Sea Limited’s very own financial services platform.
Sea Limited is a great alternative investment to Amazon (NASDAQ: AMZN) thanks to its higher growth-potential yet cheaper entry point.
Why investors should consider Sea Limited
Sea Limited benefits from three diversified and well-established core businesses.
Shopee is paving the way for e-commerce in Southeast Asia with the most monthly active users. Shopee is focused on creating a shopping experience that is personalized by leveraging AI and AR-powered tools to help brands deliver a unique and enjoyable shopping experience.
Rather than just offering the cheapest price and fastest delivery, like Amazon, Shopee is focused on engaging customers and it brings a social aspect to online shopping.
The company has introduced a range of social and engaging features; Shopee Live Chat, where buyers can speak to sellers directly before purchasing; Shopee Feed, where users can share content on what they’re listing, selling, and buying, and Shopee Live and Shopee Games, where users can live stream or play games in-app. According to App Annie, Shopee was the most downloaded app on Google Play and the second-most across the Google Play and iOS App Stores combined for the Shopping category globally in Q2. Second quarter revenue came in at $1.2 billion, up 160% year-on-year.
Garena is a leading global online games developer and publisher. The global gaming market was valued at $151.55 billion, with an expected Compound Annual Growth Rate (CAGR) of 9.17% bringing the 2025 estimated valuation to $256.97 billion. Latin America is the region with the highest growth rate — an area that Garena has been focusing on, with its ‘Free Fire’ mobile game continuing to be the highest-grossing mobile game in Southeast Asia, Latin America, and India in Q2. ‘Free Fire’ has maintained this leading position for the past eight consecutive quarters in Southeast Asia and in Latin America and three consecutive quarters in India. Q2 saw an impressive 84.8% YoY increase in paying users, with $1.2 billion, up 64.8% YoY, in bookings and $740.9 million in adjusted EBITDA.
SeaMoney is an internally-developed financial payments platform that Sea Limited has integrated into the rest of its business, namely Shopee. Over 30% of transactions on Shopee are made using SeaMoney. This segment of the business is relatively tiny, though has huge growth potential. Total payment volume reached $4.1 billion in Q2, up 150% YoY. Paying users for its mobile wallet services jumped 32.7 million too. MercadoLibre (NASDAQ: MELI) has shown us that payments can be big business, and I think that Sea Limited’s payments segment is only getting started and will follow in the footsteps of MercadoLibre.
The risks against Sea Limited
The bear case for Sea Limited is very outweighed by the bull, but there are still a couple of things to be aware of as an investor. Sea’s operating losses are concerning, which came in at $25.1 million, up from its non-operating income of $7.6 million in the year-ago period. Its sales and marketing expenses are also high, rising 138% to $921.4 million in the second quarter of 2021 but this is likely what is fueling its growth.
The company has some notable competitors, like Alibaba and its subsidiary Lazada, as well as Tencent. Alibaba is a much more established company, but I am confident Sea Limited will be able to fend for itself and continuously grow, thanks to its diversified core businesses.
Should Sea Limited be worried about Amazon?
In my opinion, no. Amazon entered the Southeast Asian market in 2017 and it has yet to materialize into a success story. Southeast Asian shopping culture has shown that it is more interested in ‘shoppertainment’, which Shopee is excelling in, and Amazon simply does not cater for this and instead opts for a low-cost, low-functionality, and unengaging platform (which, works flawlessly in the EU and US).
Consumers want a mobile-orientated and social shopping experience, like Shopee — which Amazon has not yet adapted to; and it doesn’t plan on doing so. I believe Sea Limited’s growth is here to stay.
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Contributing Writer at MyWallSt
Adam loves innovative SaaS tech companies; in particular ones that give people the freedom to make money or start a side hustle, like Etsy, Fiverr and Shopify.