Sea Restricted (SE), a Zacks Rank #5 (Robust Promote), is likely one of the premier development tales in rising markets, driving the digital adoption wave throughout Southeast Asia and components of Latin America.
After a dramatic growth and bust cycle over the previous few years, the inventory has staged a significant restoration. However after a sluggish and regular bleed, a latest earnings report took the inventory to lows not seen since 2024, 60% off the September highs.
With slowing momentum and rising competitors, traders are beginning to query whether or not the following leg increased will likely be tougher to realize than the final.
Concerning the Firm
Based in 2009 and going public in 2017, Sea Restricted has expanded from a regional gaming firm right into a diversified client web platform serving Southeast Asia and Latin America. The corporate operates throughout digital leisure, e-commerce, and monetary companies, constructing an ecosystem designed to seize customers throughout a number of levels of their on-line spending journey.
Sea operates by three major segments: E commerce, led by Shopee, which generates the vast majority of income by market transactions and associated companies; Digital Leisure, anchored by Garena and its world gaming titles; and Digital Monetary Companies, branded as SeaMoney, which incorporates cellular wallets, client and SME lending, banking, and insurance coverage merchandise.
The corporate has a market cap of $52B, with a Zacks Model Rating of “A” in Development and “A” in Momentum.
This autumn Earnings Miss
Sea reported a blended fourth quarter, lacking on earnings with $0.80 versus $0.90 anticipated, although income of $6.85 billion topped estimates. Adjusted EBITDA rose 33% yr over yr to $787 million however fell in need of the $850 million consensus.
Shopee remained the expansion engine, with GMV reaching $36.7 billion, up 28.6% yr over yr. For 2026, administration is guiding to roughly 25% GMV development at Shopee and adjusted EBITDA a minimum of flat yr over yr.
Shopee served roughly 400 million lively consumers in 2025, with frequency and month-to-month consumers each rising double digits. Logistics investments are accelerating, with Exp Specific now dealing with about 30 million parcels per day and identical day supply gaining traction in main metros.
In the meantime, SeaMoney’s mortgage ebook grew 80% yr over yr to $9.2 billion with steady credit score metrics, and Garena is guiding to double digit bookings development in 2026. The technique is constant, however with EBITDA steerage capped at no decrease yr over yr, traders are clearly questioning how a lot incremental upside stays close to time period.
Earnings Estimates Fall After Earnings
Analysts have lowered numbers throughout all-time frames since SE reported earnings. However this isn’t new, analysts have been taking numbers down for the final 90 days.
Let’s have a look at how the numbers have dropped, together with the inventory over the past three months.
For the present quarter, estimates have fallen for $1.35 to $1.14, or 15%. For subsequent quarter, estimates fell from $1.45 to $1.17 or 19%.
Trying down the street, subsequent yr’s numbers have been taken down 9%, going from $5.64 to $5.16.
And for subsequent yr we see a 13% drop, with estimates going from $7.65 to $6.68.
Technical Take
The inventory has been a bleeder since October, with a sluggish and regular push down from $180 to $80. That’s some main harm, and whereas the inventory has rallied off the latest lows, traders ought to look to promote any up transfer into resistance.
Let’s have a look at some transferring averages:
21-day: $107
50-day: $118
200-day: $150
Latest help was at $80, but when that had been to interrupt the inventory might see strain all the way down to the 2024 breakout stage of $60.
In Abstract
Sea nonetheless has scale, robust consumer engagement, and long-term structural tailwinds in rising markets. Shopee continues to develop GMV at a wholesome tempo, SeaMoney is increasing quickly with steady credit score metrics, and Garena is stabilizing. On paper, the ecosystem stays intact.
The difficulty is momentum. Earnings missed, EBITDA steerage is capped, estimates are falling throughout time frames, and the inventory is in a transparent downtrend. With resistance overhead and analysts chopping numbers, rallies look extra like promoting alternatives than recent entry factors. Till estimate revisions stabilize and the chart repairs, the danger stays to the draw back.
For now, traders trying on the software program area ought to flip to HubSpot (HUBS). The inventory is a Zacks Rank #1 (Robust Purchase) that’s trending increased after their latest earnings report.
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This text initially revealed on Zacks Funding Analysis (zacks.com).
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
