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Sea Limited (NYSE:SE): When Will It Breakeven?

Simply Wall St

Sea Limited's (NYSE:SE): Sea Limited engages in the digital entertainment, e-commerce, and digital financial service businesses in Taiwan, Thailand, Vietnam, Indonesia, and internationally. The company’s loss has recently broadened since it announced a -US$961.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$1.5b, moving it further away from breakeven. Many investors are wondering the rate at which SE will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for SE, its year of breakeven and its implied growth rate.

See our latest analysis for Sea

According to the 8 industry analysts covering SE, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$527m in 2022. Therefore, SE is expected to breakeven roughly 3 years from now. What rate will SE have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 60%, which is rather optimistic! If this rate turns out to be too aggressive, SE may become profitable much later than analysts predict.

NYSE:SE Past and Future Earnings, November 7th 2019

I’m not going to go through company-specific developments for SE given that this is a high-level summary, though, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I’d like to point out is that SE has managed its capital prudently, with debt making up 32% of equity. This means that SE has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of SE to cover in one brief article, but the key fundamentals for the company can all be found in one place – SE’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further research:

  1. Valuation: What is SE worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether SE is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Sea’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.