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It might not seem like it, but this is the perfect time to be buying tech stocks. And Sea Limited stock is one of the best opportunities out there.
Over the last month, tech growth stocks have taken a major hit with companies like Tesla Inc. (NASDAQ: TSLA) down 30% and Roku Inc. (NASDAQ: ROKU) down 35%. A big part of this is attributed to the rising 10-year treasury yield toward 2% and investors moving money back into stocks that will benefit the most from an economic rebound. In other words, the tech sell-off had little to do with the sector or the companies.
This led to many stocks getting thrown out with the bath water and has created a perfect opportunity to find great technology stocks on sale.
This is why I am coming back to one of my favorite stocks, Sea Ltd. (NYSE: SE).
Why Sea Limited Stock Is Still a Buy Now
We first introduced you to this company back in July of last year as the Amazon of Southeast Asia.
At the time, revenue was growing at 58% year over year. Since that time, it has been able to accelerate revenue growth every quarter, including a triple-digit growth rate of 102% in Q4 2020, a clear sign this company is not slowing down at all.
Right now, the stock is down roughly 15% from its all-time high and could be presenting a great time to get in.
Many investors have shifted to reopening stocks and see this e-commerce company as a business that could slow as physical stores continue to open back up. The truth is e-commerce is not going anywhere, and if anything, the pandemic has accelerated the shift to buying online.
In fact, Euromonitor International projects the global e-commerce market will expand by $1 trillion by 2025 and that roughly half of the global retail sector growth will be digital. This is a great sign for a company like Sea Group, whose Shopee business continues to be a market leader in Southeast Asia.
Over the course of the pandemic, people have seen the advantages of e-commerce. While growth may slow down, it is important to realize that e-commerce is still less than 20% of total retail spend, leaving plenty of room to grow.
The Future Is Bright for SE
Not only has e-commerce continued to grow, but Sea has also been firing on all cylinders with gaming at its core. Free Fire, its battle royale game, continues to be a revenue driver.
According to App Annie, it's the most downloaded mobile game in the world in 2020. On top of that, it was the top-ranked battle royale video game on YouTube in terms of views, with over 72 billion views globally over the course of the year. This game continues to be successful as it continues to improve the content, including a recent collaboration with one of the most popular current running anime shows, Attack on Titan. This has all helped it reach over 600 million active users in the fourth quarter of 2020.
What's also making the future bright for Sea is its Sea Money business. Sea Money had a very impressive year given how the pandemic made digital payments so important across the globe. It saw $2.9 billion in total payment volume for its mobile wallet in the quarter with $7.8 billion in total payment volume for the year. This is a huge improvement from the first quarter of 2020, where payment volume was at $1 billion.
Sea Ltd. was thrown out with the bathwater and is already seeing its stock price accelerate as the market for growth stocks stabilizes. It continues to innovate, and in the last few months, it has made a stronger push into Latin America, which could help it to significantly increase its addressable market. Sea has a strong business in all three of its divisions and looks to continue to execute on growing through 2021.
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About the Author
Alex Kagin is the Director of Technology Investing Research at Money Map Press. He has spent the last decade working in equity research, most recently with Energy Capital Research Group (ECRG), where he led technology stock research along with working as part of a team developing a customizable financial data platform for securities analysis.
Prior to joining ECRG, Alex spent 8 years at DeMatteo Research, a boutique primary research firm and broker-dealer servicing the institutional investment community. He managed the Tech, Media, and Telecom vertical where he spent time connecting with hundreds of tech executives and hedge funds to get the pulse of the market.
Alex has a B.S. in Economics from American University and previously held Series 7 and 63 security licenses.