Sea Limited Shows Strong Recovery Potential Amid Market Challenges
Sea Limited (NYSE: SE) operates the largest e-commerce platform in Southeast Asia. In addition to this, it has a successful mobile game development studio and a growing digital financial services division. Based in Singapore, Sea is somewhat shielded from the global trade tensions primarily concerning the U.S., particularly those instigated by President Donald Trump’s tariffs.
The company is experiencing robust growth, which has resulted in its stock climbing 52% year-to-date. However, it remains 57% below the all-time high established during the tech surge of 2021. With rapid revenue increases and rising profits, Sea shows potential for further recovery.
A Triple Threat in the Digital Economy
Sea’s e-commerce application is known as Shopee. This platform, which combines business-to-consumer and consumer-to-consumer sales, facilitated 3.1 billion orders worth $28.6 billion in Q1 2025 alone. Shopee is often likened to Amazon for its extensive consumer advantages, including competitive pricing and swift delivery.
In Q1, Sea introduced several new features to Shopee, particularly in Indonesia—one of its key markets. Innovations included “instant delivery,” offering customers deliveries within hours, and VIP memberships that provide benefits like unlimited free shipping and priority customer service for a monthly fee. Notably, 1 million customers have already enrolled in this membership program.
Additionally, Sea operates a digital financial services platform named Monee (formerly Sea Money). Monee supports Shopee sellers by providing loans, boosting their business growth, and offering short-term “buy now, pay later” loans to consumers. As of the end of Q1, Monee’s loan book reached $5.8 billion, marking a significant 75% increase compared to the previous year, and the platform boasted 28 million users, up 50% year-over-year.
The third segment of Sea’s business is digital entertainment, anchored by the Garena mobile game development studio. Garena is known for popular titles like Free Fire and Call of Duty: Mobile. While engagement in the gaming industry has declined since its peak in 2021, Garena’s quarterly active users grew to 661.8 million, a favorable sign after three years of decline.
Strong Revenue Growth and Rising Profitability
For Q1, Sea reported $4.8 billion in total revenue, representing a year-over-year increase of 29.6%. The e-commerce division was the largest revenue contributor, with Shopee sales jumping 28.3% to $3.5 billion.
However, it was Monee that emerged as the fastest-growing segment, generating $787.1 million in revenue—a remarkable 57.6% increase compared to last year. Moreover, Garena experienced an 8.2% boost in revenue, bringing its total to $495.6 million, aided by the increase in active users.
Historically, Sea has heavily invested in sales and marketing for growth, often resulting in significant losses. Recently, management has shifted its emphasis to profitability, aiming for a more sustainable business model. Consequently, total operating expenses grew by only 20% last quarter.
As a result of this focus, Sea realized $410.8 million in net income, a significant turnaround from a net loss of $23 million during the same quarter last year.
Sea Stock Appears Undervalued Despite Gains
Although Sea stock has gained 52% in 2025 and an impressive 119% over the past year, its price-to-sales (P/S) ratio stands at just 5.7. This is notably lower than the average of 9.2 since the company’s public debut in 2017.
Data by YCharts.
The current valuation supports the notion that Sea stock could experience further appreciation. Additionally, Sea maintains a strong balance sheet, with $10.3 billion in cash, equivalents, and short-term investments. With profitability secured, management can strategically reinvest this cash into growth initiatives, including marketing and product development, enhancing the stock’s attractiveness.
In summary, Sea stock currently represents a solid investment opportunity, especially given the broad market’s movement towards record highs.
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John Mackey, former CEO of Whole Foods Market, is a board member of The Motley Fool. Anthony Di Pizio has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Sea Limited. The Motley Fool has a disclosure policy.
The views expressed belong solely to the author and do not necessarily reflect those of Nasdaq, Inc.
