Sea Limited slumps 20% after Q3 earnings

US-listed shares of Sea Limited (SE1.US), Singaporean tech conglomerate, are sinking 20% today. Share price plunge was triggered by disappointing Q3 2023 earnings report, that showed company missing profit expectations significantly. Let's take a quick look at the release.

Sales beat but profits miss expectations

Earnings release for third quarter of 2023 from Sea Limited was mixed, at least when it comes to headline results. 

Company reported an almost-5% jump in Q3 revenue to $3.31 billion, driven by solid jump in E-commerce revenue. Company managed to beat sales expectations in E-commerce and Digital Entertainment segments while revenue from Digital Financial Services came in-line with expectations. However, earnings disappointed with adjusted EBITDA missing expectations in E-commerce and Digital Entertainment segments and beating in Digital Financial Services segment. However, it should be noted that company's earnings improved significantly compared to a year-ago quarter.

Looking past headline results, user figures also deserve a note. While number of active users turned out to be 4 million higher than expected, company reported number of paying users fell short of estimates by 6 million! Number of active and paying users turned out to be 4.2% YoY and 21.4% YoY lower, respectively.

Q3 2023 earnings

• Revenue: $3.31 billion vs $3.19 billion expected (+4.9% YoY)
  • E-commerce: $2.42 billion vs $2.18 billion expected (+16.24% YoY)
  • Digital Entertainment: $592.2 million vs $556.5 million expected (-33.7% YoY)
  • Digital Financial Services: $446.2 million vs $448.9 million expected (+36.5% YoY)
• Adjusted EBITDA: $35.3 million vs $248.3 million expected (-$357.7 million a year ago)
  • E-commerce: -$346.5 million vs -$49.4 million expected (+30.1% YoY)
  • Digital Entertainment: $234.0 million vs $237.2 million expected (-19.3% YoY)
  • Digital Financial Services: $165.7 million vs $148.3 million expected (+344.6% YoY)
• Adjusted EBITDA margin: 1.06% vs 7.78% expected
  • E-commerce: -14.3% vs -2.2% expected
  • Digital Entertainment: 39.5% vs 42.6% expected
  • Digital Financial Services: 37.1% vs 33.0%
• Adjusted net income: $30.9 million vs $196.4 million expected (-$373.5 million a year ago) 
• Adjusted EPS: $0.06 vs $0.29 expected (-$0.66 a year ago)
• Digital Entertainment active users: 544.1 million vs 540.4 million expected (-4.2% YoY)
• Digital Entertainment paying users: 40.5 million vs 46.5 million (-21.4% YoY)
• E-commerce gross merchandise value: $20.1 billion vs $19.7 billion expected (+5.2% YoY)

A look at the chart

Sea Limited (SE1.US) is slumping 20% today. Taking a look at the chart at D1 interval, we can see that the stock has recently attempted to break above the $47.00 resistance zone but failed to do so. Today's post earnings slump erased almost all the gains stock made over the past month and a half. Share price is closing in on the $35.50 support zone, marked with local lows from August and September 2023. A break below this area would push the stock to the levels not seen since late-2019.

Source: xStation5