Sea Ltd saw its shares rise 12% on Thursday after the Singapore-based technology group posted fourth-quarter revenue that exceeded Wall Street expectations. The company reported quarterly revenue of $7.1 billion, beating the analyst consensus of $6.45 billion and representing a 46.6% increase from $4.8 billion in the same period a year earlier.
Despite the revenue outperformance, Sea reported adjusted earnings per share of $0.67, which fell short of the analyst consensus of $0.76. The divergence between top-line strength and earnings per share prompted mixed reads from investors, but the market reaction was driven largely by the revenue surprise and the performance of the firm’s gaming unit.
Sea’s gaming arm, Garena, delivered results that outpaced expectations and contributed materially to the company’s consolidated performance for the quarter. That strength in Garena was a central factor cited by market participants as supporting the stock’s rally following the release of results.
Analysts at Morgan Stanley weighed in on the report, saying: "While the beat on EC is modest, it should alleviate growing investor fears on profitability with investments starting to show returns. The notable beat on Garena should support consolidated forecasts. SE’s stock price is down 26% (vs. NDX +19%) in the last 3 months and the results should be supportive esp. given the low valuations." The firm highlighted both the modest beat in EC and the stronger-than-expected gaming results as key takeaways.
In the three months leading up to the report, Sea’s stock had declined 26%, in contrast with a 19% gain in the Nasdaq 100 Index over the same period. That relative underperformance left the company’s valuation at comparatively low levels going into the quarter’s results, a point noted by the Morgan Stanley commentary.
Investors and analysts will likely evaluate how the revenue beat and Garena’s performance influence Sea’s forward forecasts and expectations for returns on recent investments. For now, the market’s positive reaction underscores the importance of top-line momentum and the contribution of the gaming division to consolidated results.
Market snapshot:
- Quarterly revenue: $7.1 billion (vs. $6.45 billion consensus)
- Year-over-year revenue growth: 46.6% (from $4.8 billion)
- Adjusted EPS: $0.67 (vs. $0.76 consensus)