Perhaps it is the hottest stock in investor’s circles that you have never heard of. Sea Limited (NYSE:SE) has had a monumental year, returning nearly 450% to investors over the past 52 weeks as the stock has climbed from the mid $20’s to its recent all-time high of $176.90. But with a name like Sea Limited, what does this company even do? A deeper dive into one of Wall Street’s hidden gems shows that this company could be a fintech powerhouse for the next decade.
Sea Limited or South East Asia Limited, is a well-diversified company that has its hands in many of the hottest sectors that investors are gushing over. SEA had its origins in online gaming in Singapore, under its Garena brand. One of the largest catalysts for Sea Limited that is still popular in the region is the game Free Fire, which has similarities to other battle royale shooting games such as Fortnite or Activision Blizzard’s (NASDAQ:ATVI) Call of Duty. Well, in Southeast Asia, gamers play Free Fire, a game that has well over 500 million app downloads and has grossed over $1 billion globally. One reason for the game’s popularity? Garena and SEA Limited are partners with Tencent (TCEHY) which has had its hand in other mobile games like PUBG Mobile and the mobile port of the Call of Duty franchise.
Sea Limited also branched out to eCommerce with the establishment of its Shopee platform in 2015. Think Amazon (NASDAQ:AMZN) or Ali Baba (NYSE:BABA) for Southeast Asia, a region that has over 650 million residents, or about double the population of the United States. Shopee’s rapid growth has been just another revenue stream for Sea Limited and a thriving business during the COVID-19 pandemic. One thing investors may want to look at, is that recently Amazon has aggressively moved into the Southeast Asian market, which could have a long-term effect on Shopee.
The third leg for Sea Limited was established in 2019 and is called Sea Money, its digital finance platform. As of now, it is the smallest part of Sea Limited, making up only about 1% of the total revenues. But we know how quickly digital finance can grow with apps like PayPal’s (NASDAQ:PYPL) Venmo and Square’s (NYSE:SQ) Cash App. The current pandemic has put an emphasis on digital payments that are touchless and therefore, germless. It is easy to see how Sea Money could eventually be Sea LImited’s biggest revenue stream, as the COVID-19 pandemic continues to disrupt traditional fiat currencies.
Sea Limited has three strong pillars to stand on in mobile gaming, eCommerce, and digital finance, in a region of the world that is populous and rapidly growing. Perhaps the most important element of SE’s long-term success is the fact that Tencent owns a near 40% stake in the company. Some of the other brands and companies in Tencent’s portfolio includes Discord, Epic Games, Riot Games as well as major stakes in Tesla (NASDAQ:TSLA), Spotify (NYSE:SPOT), and Snapchat (NYSE:SNAP). Sea offers a rare opportunity for investors to invest in a part of the world that is not always accessible, and it is often in these emerging markets where the most rapid growth occurs.
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