- Garena, Sea’s only profitable segment, serves as a lifeline for its other two segments, but Bookings are expected to fall sharply in FY2022.
- In addition, Shopee's losses are widening. However, the e-commerce segment is expected to be self-funded by 2025. This is achievable as take rates are trending in the right direction.
- SeaMoney is also gaining traction at an unprecedented pace, a monster lurking in the shadows. Investors should pay attention as this segment could serve as Sea's second cash cow.
- With a net cash position of $5.9 billion and $(3.6) billion of estimated AEBITDA in FY2022, it won't be long before Sea requires another cash infusion.
- Despite unprofitability risks, Sea has a strong brand, network effects, and barriers to entry moats. The stock is trading at the lowest multiple ever - it is worth a nibble at these prices.
For further details see:
Sea Limited: The Three-Headed Monster