Why Sea Limited was a wreck on Monday

What happened

Southeast Asia stocks e-all tech warehouse Sea Limited (NYSE: SE) closed 10.3% on Monday. It’s a shame because the only real news about Sea Stock today was the “good news” sort.

so what

This morning analysts at the Australian investment bank Macquarie upgraded the shares of Sea Limited to “Outperform” (ie buy), Reports TheFly.comand their price target for the e-commerce star more than doubled. At $ 280 per share, Macquarie’s target means up to 35% more than Sea’s closing price for the day.

Macquarie cited Sea’s “strong financial outlook” in which the company forecast it will more than double its e-commerce business this year compared to 2020 and increase its digital entertainment revenue by 38%. These two companies combined accounted for more than 95% of Sea’s total sales of $ 4.4 billion, according to data last year S&P Global Market Intelligence. Overall, this amount could double again to USD 9 billion in 2021.

Image source: Getty Images.

What now

Even in the worst case scenario, where Sea’s fintech business doesn’t grow at all, there is an excellent chance that Sea will more than double its total revenue in 2021. So why was the sea population declining today?

Perhaps for the same reason it has fallen more than 25% in the past few weeks: Macquarie attributes the sell-off to investors who fear rising bond yields for “safe” bond investments will attract investors, fear of the Sea skies have valuation of 24 times trailing sales and missing profit.

With Sea’s generally accepted accounting principles (GAAP), profitability is at least two years away (analysts say), but bond rates are rising today, that can be a cause for concern.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Sea Limited. The motley fool has one Confidentiality Policy.

The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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