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. With the latest financial year loss of US$1.7b and a trailing-twelve-month loss of US$984m, the US$35b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Sea will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 29 industry analysts covering Sea, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$921m in 2023. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 52% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Sea's growth isn’t the focus of this broad overview, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
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 56%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are too many aspects of Sea to cover in one brief article, but the key fundamentals for the company can all be found in one place – Sea's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:
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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