Why Sea Limited Stock Was Gaining Today

What happened

Shares of Sea Limited (NYSE: SE) were moving higher again Monday even though there was no specific news out regarding the Southeast Asian e-commerce and digital gaming company. Instead, it seemed to be benefiting from the bullish trend in e-commerce stocks that began last week with strong earnings reports from Shopify and Amazon.

As of 1:11 p.m  EDT, Sea Limited stock was up 8.3% on the day. At the same time, the Nasdaq was up 1.5%, and other e-commerce stocks like EtsyWayfair, and Shopify had all gained at least 5%.

The reception desk at the Sea Limited office

Image source: Sea Limited.

So what

Investors seem to be increasingly bullish about what they will see in Sea's second-quarter earnings report, which is due later this month, after two of the most closely watched companies in the e-commerce sector delivered blowout numbers last week.

Shopify, the e-commerce platform provider, said revenue jumped 97% in the quarter to $714.3 million as gross merchandise volume, or the value of goods sold on the platform, soared 119%. The company clearly benefited from the rapid shift in retail from physical stores to digital interfaces.

Amazon showed off similar strength in its report as revenue surged 40% and profits nearly doubled from a year ago, coming in 600% higher than estimates.

Sea Limited operates Garena, a digital gaming platform, Shopee, an e-commerce marketplace focused on Southeast Asia, and a digital payment service called Sea Money; all three segments seem well-positioned to capitalize on the effects of the pandemic. In one positive sign, App Annie said that Garena's Free Fire remained one of the top gaming apps in the world in the second quarter.  

Now what

Sea Limited has not announced its earnings date yet, but its second-quarter earnings report last year came out on Aug. 20, so investors should expect similar timing. Keep an eye on its e-commerce results as that seems to be the segment that investors are most excited about, though it remains unprofitable -- a majority of the company's revenue still comes from digital entertainment.

Analysts are expecting Sea Limited to report a revenue jump of 72.5% to $1.06 billion and for its loss per share to narrow from $0.52 a year ago to $0.47.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman owns shares of Amazon and Sea Limited. The Motley Fool owns shares of and recommends Amazon, Etsy, Sea Limited, Shopify, and Wayfair and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

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