Forecast: The AI-related Stock experienced a remarkable surge of 160% in 2024 and is anticipated to surpass the market once more in 2025.
Sea Limited's remarkable turnaround is nothing short of impressive. After experiencing a significant dip in 2023, the Singapore-based tech giant has staged an incredible comeback, with its stock gaining over 160% in 2024. This performance made it the standout performer in my investment portfolio that year.
Looking at the business, it's easy to understand why Sea Limited has seen such a remarkable recovery. Let's dive into the details.
Sea Limited's Impressive Rebound
While we don't have the full-year figures yet, it's safe to say that 2024 was a much better year for Sea Limited than the previous one. The company reported a remarkable 30% year-over-year revenue growth in Q3 2024, a stark contrast to the 5% growth it saw in 2023.
This impressive growth was not limited to one segment but spread across all three of Sea Limited's business domains.
The Revival of Gaming
Sea Limited's Garena digital entertainment platform, the backbone of its gaming business, has seen a remarkable resurgence. Daily active users surpassed 100 million, marking a 25% year-over-year increase. The company's flagship game, Free Fire, continues to dominate the market, with revenue expected to grow by over 30% in 2024.
The E-commerce Boom
Sea Limited's e-commerce platform, Shopee, reported a significant improvement in Q3 2024. For the first time in the company's history, the platform generated positive earnings before interest, taxes, depreciation, and amortization (EBITDA). Gross merchandise volume (GMV) grew by 25% year-over-year, while the take rate, or revenue as a percentage of transaction volume, improved by a substantial 160 basis points. These factors combined resulted in a staggering 45% year-over-year growth in e-commerce revenue.
The Fintech Surge
Sea Limited's digital finance arm, SeaMoney, has also seen significant growth. The loan portfolio grew by 70% year-over-year to reach $4.6 billion, while revenue increased by 38% compared to the previous year. The number of new borrowers in the ecosystem also rose by 4 million, and the percentage of non-performing loans actually decreased.
Despite these impressive figures, Sea Limited still shows signs of significant upside potential.
Prioritizing Value
Sea Limited is trading at less than four times its trailing-12-month sales, compared to the pre-pandemic range of 6-10 times book. This indicates that the stock is currently undervalued compared to its historical performance.
With its expanding logistics network and a robust economy, Sea Limited has the perfect opportunity to maintain its growth momentum for several more years. The company also has a strong focus on artificial intelligence, with its Sea AI Lab (SAIL) division dedicated to enhancing its existing businesses and exploring new opportunities.
It's also worth noting that Sea Limited's gross margin is currently 36%, while its adjusted EBITDA margin sits at around 12%. Given that the company is still in its growth phase, these figures indicate substantial room for expansion in the future.
In conclusion, Sea Limited's impressive rebound and solid upside potential make it an attractive investment option. With a strong focus on growth, an undervalued stock price, and a commitment to artificial intelligence, there's every reason to believe that Sea Limited can continue to outperform the market in the years to come.
The turnaround of Sea Limited's financial situation can be attributed to its strategic investments in various sectors. In 2024, Sea Limited's finance department reported an increase in revenues, providing funds for further investing in its business domains.
Sea Limited's robust financial performance in 2024 enabled them to allocate funds towards expanding their logistics network and artificial intelligence capabilities, setting the stage for continued growth and potential future profits. [money, investing, finance]
