Sea Limited’s shares have returned 19.8% over the past three months, outperforming the Zacks Computer & Technology sector and the Zacks Internet Software industry’s declined of 8.6% and 5%, respectively.

SE has also outperformed its industry peers, including Paychex, Radware and Elastic. Over the same time frame, shares of Paychex and Radware have gained 9.1% and 1.8%, while Elastic has lost 8.4%.

Sea Limited’s solid stock price performance has been driven by its impressive fourth-quarter 2024 results. In the fourth quarter, revenues grew 37% year over year, driven by strong Gross Merchandise Value (“GMV”) growth in the e-commerce business and development in SeaMoney's digital financial services segment.

SE Gains Momentum From Key Segments

E-commerce revenues were $3.7 billion in the fourth quarter of 2024, marking a strong 41.3% year-over-year increase. Shopee remained the key driver, with gross orders rising 20.1% and GMV growing 23.5%.

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The digital financial services segment delivered strong growth in the fourth quarter, with revenues rising 55.2% year over year. Consumer and SME loans principal outstanding surged 63.9% year over year and surpassed $5 billion as of Dec. 31, 2024. This growth was driven by on-platform SPayLater loans and off-platform cash loans, indicating a successful expansion of the credit business.

The digital entertainment segment saw strong fourth-quarter growth, with total bookings rising 19% year over year. Quarterly active users rose 16.9%, whereas paying users increased 27.2%.

SE Gains Strength From Strategic Alliances & AI Upgrades

Sea Limited continues to gain momentum through strategic collaborations and product innovations, driving engagement and expanding its market presence.

The partnership with YouTube significantly enhanced Shopee’s ecosystem by enabling seamless in-video shopping. Since its launch, the collaboration has led to a six-fold increase in average daily orders in Indonesia as of January 2025.

Garena made a strong comeback, with high-profile collaborations driving Free Fire’s resurgence. A key highlight was Free Fire’s January 2025 partnership with "NARUTO SHIPPUDEN," one of the game's most significant anime collaborations. This alliance not only introduced exclusive content but also reinforced Free Fire’s dominance in the gaming industry.

In digital financial services, SeaMoney's SPayLater has played a crucial role in attracting first-time borrowers. By offering small credit limits and short tenures, Shopee purchases have become more accessible.

Sea Limited has used AI to enhance customer service, resulting in significant improvements. AI-powered chatbots have significantly boosted customer satisfaction scores over the past year, while reducing service costs per contact nearly 30% year over year. Additionally, the integration of large language models has simplified the buyer return and refund process, addressing a key e-commerce challenge.

SE Struggles With Gaming Decline & E-Commerce Rivalry

Garena faces rising competition and declining engagement. The gaming division’s dependence on a few hit titles is concerning, as active player counts have dropped for two consecutive quarters, and average revenue per player continues to decline. As a result, fourth-quarter 2024 revenues were flat at $519 million compared with $511 million in the year-ago period.

Shopee's e-commerce operations are encountering intense competition from homegrown platforms like Tokopedia, particularly in key markets such as Indonesia. This competitive pressure could impact Shopee's market share and profitability.

What Should Investors Do Now?

Sea Limited presents a mixed investment landscape. The company's e-commerce and digital finance segments, led by Shopee and SeaMoney, are growing steadily. However, the gaming division, Garena, is struggling with declining engagement. While long-term investors may find potential in SE’s expansion, AI advancements and partnerships; concerns over profitability and competition require careful consideration.
 
The company currently carries Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable entry point to accumulate the stock.