Bear of the Day: Sea Limited (SE)

Sea Limited (SE), a Zacks Rank #5 (Strong Sell), is one of the premier growth stories in emerging markets, riding the digital adoption wave across Southeast Asia and parts of Latin America.

After a dramatic boom and bust cycle over the past few years, the stock has staged a meaningful recovery. But after a slow and steady bleed, a recent earnings report took the stock to lows not seen since 2024, 60% off the September highs.

With slowing momentum and rising competition, investors are starting to question whether the next leg higher will be harder to achieve than the last.

About the Company

Founded in 2009 and going public in 2017, Sea Limited has expanded from a regional gaming company into a diversified consumer internet platform serving Southeast Asia and Latin America. The company operates across digital entertainment, e-commerce, and financial services, building an ecosystem designed to capture users across multiple stages of their online spending journey.

Sea operates through three primary segments: E commerce, led by Shopee, which generates the majority of revenue through marketplace transactions and related services; Digital Entertainment, anchored by Garena and its global gaming titles; and Digital Financial Services, branded as SeaMoney, which includes mobile wallets, consumer and SME lending, banking, and insurance products.

The company has a market cap of $52B, with a Zacks Style Score of “A” in Growth and “A” in Momentum.

Q4 Earnings Miss

Sea reported a mixed fourth quarter, missing on earnings with $0.80 versus $0.90 expected, though revenue of $6.85 billion topped estimates. Adjusted EBITDA rose 33% year over year to $787 million but fell short of the $850 million consensus.

Shopee remained the growth engine, with GMV reaching $36.7 billion, up 28.6% year over year. For 2026, management is guiding to roughly 25% GMV growth at Shopee and adjusted EBITDA at least flat year over year.

Shopee served roughly 400 million active buyers in 2025, with frequency and monthly buyers both rising double digits. Logistics investments are accelerating, with Exp Express now handling about 30 million parcels per day and same day delivery gaining traction in major metros.

Meanwhile, SeaMoney’s loan book grew 80% year over year to $9.2 billion with stable credit metrics, and Garena is guiding to double digit bookings growth in 2026. The strategy is consistent, but with EBITDA guidance capped at no lower year over year, investors are clearly questioning how much incremental upside remains near term.

Earnings Estimates Fall After Earnings

Analysts have lowered numbers across all-time frames since SE reported earnings. But this is not new, analysts have been taking numbers down for the last 90 days.

Let’s look at how the numbers have dropped, along with the stock over the last three months.  

For the current quarter, estimates have fallen for $1.35 to $1.14, or 15%. For next quarter, estimates fell from $1.45 to $1.17 or 19%.

Looking down the road, next year’s numbers have been taken down 9%, going from $5.64 to $5.16.

And for next year we see a 13% drop, with estimates going from $7.65 to $6.68.

Technical Take

The stock has been a bleeder since October, with a slow and steady push down from $180 to $80. That is some major damage, and while the stock has rallied off the recent lows, investors should look to sell any up move into resistance.

Let’s look at some moving averages:

21-day: $107

50-day: $118

200-day: $150

Recent support was at $80, but if that were to break the stock could see pressure down to the 2024 breakout level of $60.

In Summary

Sea still has scale, strong user engagement, and long-term structural tailwinds in emerging markets. Shopee continues to grow GMV at a healthy pace, SeaMoney is expanding rapidly with stable credit metrics, and Garena is stabilizing. On paper, the ecosystem remains intact.

The issue is momentum. Earnings missed, EBITDA guidance is capped, estimates are falling across time frames, and the stock is in a clear downtrend. With resistance overhead and analysts cutting numbers, rallies look more like selling opportunities than fresh entry points. Until estimate revisions stabilize and the chart repairs, the risk remains to the downside.

For now, investors looking at the software space should turn to HubSpot (HUBS). The stock is a Zacks Rank #1 (Strong Buy) that is trending higher after their recent earnings report.  

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This article originally published on Zacks Investment Research (zacks.com).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.