Sea Soars After Q1 Beat: Can Shopee and Monee Sustain the Momentum?

$Sea Ltd(SE)$   shares soared 8.2% to $154.13 on May 13, 2025, following a robust Q1 earnings report that beat expectations. The rally continued in after-hours trading, with Sea’s stock now up nearly 120% year-to-date-making it one of the best performers among global tech and internet companies.

What is Sea?

Headquartered in Singapore, Sea Limited is a leading digital platform company in Southeast Asia and Latin America. It operates three core businesses:

1) Shopee: The region’s largest e-commerce marketplace, connecting millions of buyers and sellers across Asia and Brazil.

2) Monee (formerly SeaMoney): A fast-growing digital financial services platform, offering payments, lending, and financial products to both consumers and merchants.

3) Garena: A global digital entertainment business, best known for hit mobile games like Free Fire.

Sea's integrated ecosystem enables it to capture growth across the region's booming internet economy, from online shopping and payments to gaming and digital finance.

Year-to-Date Stock Performance

Sea's share price has delivered a stellar run in 2025, more than doubling since the start of the year and far outpacing the S&P 500 and most regional peers. The surge reflects renewed investor confidence in Sea's ability to drive profitable growth, expand margins, and maintain market leadership amid a challenging macro environment.

Q1 2025 Earnings Highlights

Sea's first-quarter results reinforced its reputation for strong execution and resilience:

1. Group Revenue: $4.8 billion, up 29.6% year-on-year.

2. Gross Profit: $2.2 billion, up 43.9% year-on-year.

3. Net Profit: $411 million, a significant turnaround from a net loss of $23 million a year ago.

4. Adjusted EBITDA: $947 million, beating both consensus and Goldman Sachs' above-consensus forecast.

Segment Performance

Sea Limited delivered solid performance across all business lines in Q1 2025. 

Shopee, its e-commerce arm, maintained strong growth momentum with GMV up 22% year-on-year and stable quarter-on-quarter. Profitability improved notably, as adjusted EBITDA margin rose to 0.9% of GMV-well above expectations-driven by lower sales and marketing expenses, logistics efficiencies, and higher ad monetization. Shopee continued to lead in Asia and Brazil, supported by new initiatives like VIP memberships and AI-powered seller tools, while management reaffirmed a 20% GMV growth target for the year. Competition remained rational, and Shopee’s local marketplace model helped it stay resilient despite macro headwinds.

In digital financial services, Monee (formerly SeaMoney) reported revenue of $787 million and adjusted EBITDA of $241 million. The loan book expanded to $5.8 billion, with strong growth in Thailand, Malaysia, and Brazil. Growth was powered by increased adoption of pay-later products, market expansion, and ongoing product innovation. Asset quality stayed healthy, with a non-performing loan ratio of just 1.1%. Management reiterated that Monee's loan growth is expected to outpace Shopee's GMV, reflecting robust demand and untapped market potential.

Garena, the digital entertainment segment, also posted strong results. Active users rose to 662 million (+11.3% YoY), and paying users increased by 32.2%. Revenue and EBITDA saw double-digit growth, benefiting from successful content collaborations and new game launches. Management expects continued support from new titles and ongoing engagement initiatives.

Overall, Sea's Q1 results highlight its ability to drive both growth and profitability across e-commerce, fintech, and gaming, reinforcing its leadership in the region's digital economy.

Analyst Views and Outlook

Analysts remain broadly optimistic about Sea's prospects. Goldman Sachs raised its 12-month price target from $167 to $186, citing Shopee's margin expansion, Monee's rapid loan growth, and Garena's user revival as key drivers. The company's diversified business model, disciplined cost management, and strong execution underpin its resilience, even as macro headwinds and competition from players like TikTok Shop persist.

While the outlook is positive, analysts caution that ongoing competition, macroeconomic uncertainty, and the need to balance reinvestment with profitability could introduce volatility. Nevertheless, Sea's local marketplace model and cost leadership have helped it weather industry cycles better than many peers.

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