We came across a bullish thesis on Sea Limited on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on SE. Sea Limited’s share was trading at $174.66 as of August 13th. SE’s trailing and forward P/E were 121.76 and 58.82 respectively according to Yahoo Finance.
Sea Limited delivered strong Q2 2025 results, with revenue rising 38.2% YoY to $5.26 billion, beating estimates by 5.7%, and adjusted EBITDA nearly doubling to $829 million from $448 million a year earlier. Net income surged to $440 million, driven by gross margin expansion to 45.8% and operating margin improvement to 9.3%. Operating cash flow margin rose sharply to 30.7%. E-commerce remained the largest contributor, generating $3.77 billion (+33.7% YoY) with GMV of $29.8 billion (+27.9% YoY) and operating margin up 7.1 pps to 4.1%. Shopee’s “Cheaper, faster” campaign boosted purchase frequency and reduced logistics costs, while VIP membership programs and live-stream commerce deepened user engagement.
Digital Financial Services revenue grew 70% YoY to $883 million, with a loan book of $6.9 billion (+90% YoY) and active borrowers exceeding 30 million; Brazil and Malaysia emerged as high-growth markets. Garena bookings rose 23% YoY to $661 million, anchored by Free Fire’s sustained 100+ million DAUs, with new content, IP collaborations, and AI-driven enhancements bolstering retention. AI integration across segments improved ad targeting, customer service, and product personalization, while instant delivery pilots and intelligent demand forecasting enhanced fulfillment speed.
Despite EPS of $0.65 missing estimates by 11% and margin softness in Digital Financial Services, management reiterated strong full-year growth expectations, citing continued e-commerce profitability gains, fintech expansion in Brazil, and Free Fire-led gaming momentum. With competitive pressures contained and multiple growth vectors in e-commerce, fintech, and gaming, Sea remains positioned for sustained revenue and earnings expansion, supported by disciplined execution and scaling efficiency across high-growth markets.
Previously, we covered a bullish thesis on Sea Limited (SE) by Wolf of Harcourt Street in May 2025, which highlighted Shopee’s growth, Garena’s user resurgence, and Sea Money’s lending expansion, driving an earnings rebound. The stock has appreciated about 6.13% since the thesis played out. The thesis remains valid, with Sergey sharing a similar view but focusing on Q2 2025’s record results and AI-driven gains.
