Sea Limited has staged a remarkable turnaround, transforming from a market concern into a textbook case of profitable corporate evolution. With its stock surging more than 50% since the start of the year, investors are now questioning whether this momentum is sustainable or if a period of consolidation is due.
The company’s success is largely attributed to a powerful synergy between its three core segments: the e-commerce platform Shopee, the gaming unit Garena, and the financial services arm Monee. This interconnected ecosystem, often described as a “flywheel” effect, creates a self-reinforcing cycle of growth. The strategy delivered impressive results in the second quarter of 2025. Shopee, the e-commerce giant, recorded its first-ever positive adjusted EBITDA of $227.7 million. Its Gross Merchandise Volume (GMV) surged 28.2% to $29.8 billion, with artificial intelligence initiatives credited for boosting conversion rates by 8%.
Strong Performance Across Business Segments
The positive momentum was not confined to e-commerce. Garena reported a 23.2% increase in bookings, prompting the company to raise its full-year growth forecast to over 30%. Meanwhile, the Monee division nearly doubled its loan book to $6.9 billion, all while maintaining a stable non-performing loan ratio of just 1.0%.
Should investors sell immediately? Or is it worth buying Sea?
This robust performance across the board underscores the success of Sea Limited’s strategic pivot. The company has shifted its focus from aggressive, growth-at-all-costs expansion to a more disciplined approach centered on profitability. This change in direction has been the primary driver behind the stock’s impressive rally since early 2024.
Valuation and the Path Forward
Despite these strong fundamentals, some market strategists advise caution. They point to what appears to be a rich valuation, even as metrics like the price/earnings-to-growth (PEG) ratio might suggest potential undervaluation. The next critical test will arrive in November with the release of the next quarterly earnings report. The key question for investors is whether Sea Limited can continue to surpass market expectations. The company’s ability to sustain its upward trajectory hinges on proving that its “flywheel” effect represents a durable competitive advantage rather than a temporary surge.
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