6. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 63
Sea Limited (NYSE:SE) is one of the best e-commerce stocks to invest in. The technology company is based in Singapore and specializes in three segments including e-commerce, digital financial services, and digital entertainment. The company first launched its e-commerce platform, Shopee, in Southeast Asia and Taiwan in 2015. Shopee is now functional in 8 countries including Singapore, Malaysia, Thailand, Indonesia, Taiwan, and Korea.
Consumers can use Shopee to secure fashion, makeup, and home products among other daily items. It is one of the fastest-growing e-commerce platforms in the region and makes up two-thirds of the company’s revenue. In Q2 2024, Sea Limited’s (NYSE:SE) e-commerce revenue grew by 34% to reach $2.8 billion, exceeding initial expectations of $2.68 billion. By the end of this year, the company expects sales from Shopee to expand by more than 20%, revised upwards from a late teens estimate made earlier this year.
Sea Limited (NYSE:SE) is improving its services to excel in a competitive e-commerce landscape. SPX, also referred to as Shopee Xpress, is an integrated logistics service by Shopee that delivered over 70% of orders placed in Asia within 3 days in Q2 2024. During the same quarter, the company also launched a “no questions asked return” program. This policy pushed buyers to manage order returns as efficiently as possible, oftentimes within 24 hours. Better return policies also increase the average order basket size by over 10% from Malaysian buyers.
Overall, during the second quarter of 2024, gross orders on Shopee increased by 40%, and gross merchandise value went up by 29%, year over year. Sea Limited (NYSE:SE) has a positive outlook on its position in the industry, suggesting it is stable and expects profits to grow consistently over the next few quarters.
Analysts are bullish on SE and their 12-month median price target of $90 points to a 10% upside from current levels. Overall, SE was held by 63 hedge funds at the close of Q2 2024 with total stakes amounting to $3.54 billion. As of June 30, Tiger Global Management LLC was the largest shareholder with a position worth $1.15 billion.
SE is currently trading at 42 times this year’s earnings estimate, higher than the sector’s forward P/E of 13. While there’s a premium here, the company’s growth trajectory cannot be ignored. Analysts expect earnings to grow 224% this year to $0.81 per share, and by 672% to $1.93 per share in 2025, from 2023.
Lakehouse Capital’s Lakehouse Global Growth Fund stated the following regarding Sea Limited (NYSE:SE) in its April 2024 investor letter:
“At the portfolio level, the biggest contributor to performance during the month was Sea Limited (NYSE:SE) (+18.2%), which performed well as both Shopee and its primary competitor, TikTok Shop, raised take-rates meaningfully across several countries during the quarter. This is a noteworthy development as we are now starting to see mounting evidence of more rational competitive behaviour from the dominant players in Southeast Asia’s e-commerce market, which in turn,signals a more favourable industry structure lay ahead.”
