Why Sea (SE) Stock Is Up Today

What Happened?

Shares of e-commerce and gaming company Sea (NYSE:SE) jumped 19.6% in the afternoon session after it announced strong second-quarter results that overshadowed an earnings miss. The company's revenue grew 31.6% year-over-year to $5.26 billion, comfortably beating Wall Street's estimate of $5.01 billion. While its GAAP profit of $0.65 per share missed analyst expectations, investors appeared to focus on other positive metrics. The company's adjusted EBITDA, a measure of profitability, came in at $829.2 million, also beating consensus estimates. Furthermore, Sea demonstrated robust user growth, with paying users increasing to 61.8 million. This combination of strong top-line performance and an expanding user base fueled optimism about the company's prospects.

The shares closed the day at $173.87, up 18.7% from previous close.

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What Is The Market Telling Us

Sea’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Sea and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock gained 16.2% on the news that 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.

Sea is up 66.7% since the beginning of the year, and at $174.83 per share, has set a new 52-week high. Investors who bought $1,000 worth of Sea’s shares 5 years ago would now be looking at an investment worth $1,377.

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