1 E-Commerce Stock I Can’t Buy Enough Of – Motley Fool
Summary
The Singapore-based e-commerce and gaming giant Sea Limited (NYSE:SE) has been on a roll this year, with its stock rising 51% year to date. However, this is a rather poor performance for Sea historically: Its annualized return since its IPO in 2017 is over 105%.
This massive return is because of the company’s impeccable business performance. The company has become one of the most popular companies in Southeast Asia, growing revenue by over 2,800% since late 2016. Amazingly, this stel…….
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The Singapore-based e-commerce and gaming giant Sea Limited (NYSE:SE) has been on a roll this year, with its stock rising 51% year to date. However, this is a rather poor performance for Sea historically: Its annualized return since its IPO in 2017 is over 105%.
This massive return is because of the company’s impeccable business performance. The company has become one of the most popular companies in Southeast Asia, growing revenue by over 2,800% since late 2016. Amazingly, this stellar performance has continued: It’s still putting up triple-digit year-over-year growth as a $167 billion company. This three-headed dragon is still growing immensely, and its growth opportunities keep expanding, which is why I think Sea Limited has plenty of success ahead.
Image source: Getty Images.
A gaming giant
Sea Limited has three business segments, the first being its gaming segment: Garena. Garena is a global mobile game developer, primarily known for the game FreeFire. This game has rapidly grown in popularity in Asia and Latin America, and it is even starting to gain traction in the U.S. It is the second-largest game on Alphabet‘s Google Play Store by monthly active users and the highest-grossing mobile battle royal game in Southeast Asia, India, Latin America, and the U.S.
This dominance has led to Q3 revenue from its digital entertainment segment — which primarily consists of FreeFire — to grow 93% year over year to $1.1 billion. This comes from a massive base of free and paying users — totaling 729 million quarterly active users globally, which has increased 27% on the year.
This segment of the company does not come without its risks, however. The majority of growth from this segment is from the success and monetization of FreeFire’s users. This means that if the mobile game’s popularity withers, this segment could get hurt. Sea has already seen growth decline in this segment, decelerating year-over-year revenue growth from 167% in Q2 2021 to just 93% this quarter.
While growth might be decreasing, 93% growth is still impressive. Sea has also been making improvements to increase engagement and monetization, like Free Fire MAX, a new immersive standalone version of Free Fire with enhanced specifications. If the company continues to create new engagement tools while it develops more popular games, the company could continue growing at impressive growth rates, although the days of Garena’s triple-digit growth might be behind it. The real growth driver for Sea is Shopee, its e-commerce arm.
E-commerce dominance
With over 1.7 billion Q3 orders on Shopee, the e-commerce platform has shown massive dominance. The platform brought in $1.5 billion in revenue in Q3, which represented 134% year-over-year growth. Like FreeFire, Shopee is seeing broad success, holding the top spot globally in the Shopping category on the Google Play Store by total time spent on the app. Even in Brazil, where Shopee launched just two years ago, Shopee was the most-downloaded app in the Shopping category on the Google …….
Source: https://www.fool.com/investing/2021/11/23/1-e-commerce-stock-i-cant-buy-enough-of/