Sea Limited (NYSE:SE) Could Be Less Than A Year Away From Profitability
Sea Limited (NYSE:SE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Sea Limited, together with its subsidiaries, engages in the digital entertainment, e-commerce, and digital financial service businesses in Southeast Asia, Latin America, rest of Asia, and internationally. The US$44b market-cap company announced a latest loss of US$1.7b on 31 December 2022 for its most recent financial year result. The most pressing concern for investors is Sea's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Sea
Sea is bordering on breakeven, according to the 29 American Entertainment analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$717m in 2023. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Sea given that this is a high-level summary, however, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Sea is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Sea's case is 60%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of Sea which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Sea, take a look at Sea's company page on Simply Wall St. We've also compiled a list of key factors you should further research:
Valuation: What is Sea 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 Sea is currently mispriced by the market.
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 background.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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