What Happened?

Shares of e-commerce and gaming company Sea (NYSE:SE) jumped 16.2% in the morning session after the company reported strong third-quarter earnings that blew past analysts' revenue and EBITDA expectations. The EBITDA beat was partly due to its lower sales and marketing expenses compared to the same quarter last year. This is sending shares higher because a key debate surrounding Sea is whether the company can hop off the treadmill of marketing spend, which used to exceed its revenue in previous years. Overall, this quarter had some key positives.

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What The Market Is Telling Us

Sea’s shares are not very volatile and have had no moves greater than 5% over the last year. 

The biggest move we wrote about over the last year was 8 months ago when the stock gained 16.6% on the news that the company reported fourth-quarter results that narrowly topped analysts' revenue and adjusted EBITDA expectations. 

Notably, the company announced the first full year of annual profit since its IPO. The company noted that despite growing competition in the e-commerce market in South East Asia, Shopee (SEA's e-commerce business) is gaining market share. 

As a result, the company expects Shopee's full-year GMV growth to be in the high teens range and its adjusted EBITDA to turn positive in the second half of the year. 

Despite a challenging macro environment, SeaMoney (SEA's fintech operation) recorded the first year of positive profit in 2023. Finally, Sea's game studio, Garena, recorded huge success with Free Fire, one of its published games, emerging as the most downloaded mobile game globally, according to Sensor Tower. 

Overall, this was a solid quarter for Sea, given the beat on adjusted EBITDA and profitability and the reassuring outlook.

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