On Monday, Phillip Securities adjusted its rating on Sea Ltd. (NYNYSE:SE: SE) stock, moving from a "Buy" to an "Accumulate" stance, while setting a price target of $70.00. The revision reflects the company's successful investments in its e-commerce platform, Shopee, which has experienced significant market share growth and increased revenue.
Shopee's strategic investments since July of the previous year have led to a notable surge in its Gross Merchandise Value (GMV) and gross orders, recording increases of 29% and 46% year-over-year, respectively.
Additionally, the company's revenue grew by 23% year-over-year in the fourth quarter of 2023. Shopee has been focusing on expanding its last-mile delivery facilities and optimizing routing, which has reduced costs and improved delivery speeds.
The improvements in logistics and market share are seen as positive indicators of Shopee's long-term growth potential. The platform is expected to maintain a high-teens GMV growth in the fiscal year 2024 as its efforts to gain market share begin to pay dividends. Shopee's live-streaming e-commerce business, which now represents 15% of order volume by the end of the fiscal year 2023, continues to grow, bolstered by its leading position and economies of scale.
Sea Ltd. has also expressed confidence in Shopee's ability to return to positive EBITDA in the second half of 2024, despite increasing competition. In the gaming segment, despite a 52% year-over-year decline in revenue, the company has provided a positive outlook for its flagship game, Free Fire. Sea Ltd. anticipates a double-digit increase in both the user base and bookings for Free Fire in the fiscal year 2024, suggesting a potential rebound in gaming earnings after two years of decline.
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