Shares of Sea Limited (NYSE: SE) , southeast Asia's leading internet company, continue their wild ride. The stock is trading down 75% in 2022 with just over a month left to go. However, following the third-quarter earnings update, shares rallied some 40% before giving back some gains as management promised to slash expenses. After a spate of heavy spending to support unprofitable expansion in 2020 and 2021, the company's new goal is to get operations running self-sufficiently as soon as possible.
Sea's e-commerce business Shoppee is expected to reach breakeven by the end of 2023, but its profitable video game segment Garena (led by the global hit Free Fire ) still struggles as many gamers return to work or school. With a long and hard road ahead of it, is now the time to buy Sea stock?
At times in 2020 and 2021, Sea actually started to turn free-cash-flow positive. But as the pandemic boom in online business activity returned to normal in 2022, Sea's free cash flow turned negative -- to the tune of negative $1.68 billion over the last 12-month stretch.
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Is Sea Stock a Buy After Promising to Slash Expenses?