Sea Limited Stock News and Forecast: SE plunges on India videogame ban
- Sea Limited's Free Fire mobile game was banned in India
- SE stock shares dropped 18.4% on Monday.
- Sea Limited is on track to grow its revenue to $14 billion in 2022.
Sea Limited's (SE) stock collapsed 18.4% on Monday after India banned its mobile videogame Free Fire afterhours on Monday. The game had been one of the highest-grossing games of its kind in India, according to industry data. The stock is up 3.7% in Tuesday's premarket at $133.90.
Sea Limited News: Could Shopee get banned too?
The greater than 18% decline meant Sea Limited lost more than $16.2 billion in market cap in a single session. It may not be a Meta Platforms-level implosion, but it is quite significant all the same.
Investors are worried that if Free Fire is the first to go, then its ecommerce unit Shopee may be next. India has been on a streak of banning Chinese apps, with more than 100 banned in the past two years alone for various infractions. Sea Limited is based in Singapore, but it does have a Chinese-born founder, Forrest Li, although he is said to now be a Singaporean citizen.
The company said in a statement that it has never transmitted Indian user data to servers in China. Chinese bohemoth Tencent, however, is Sea's biggest shareholder.
JPMorgan cut its price target on SE stock from $420 to $250. The new price target is still nearly double Monday's closing price just above $129, which demonstrates that Wall Street remains greatly optimistic on this Southeast Asian digital standout. One of the stock's biggest supporters, Ark Invest's Cathie Wood, bought about 146,500 shares through her various funds during Monday's setback for approximately $20 million.
SE key statistics
| Market Cap | $72 billion |
| Price/Earnings | N/A |
| Price/Sales | 8 |
| Price/Book | 9 |
| Enterprise Value | $65 billion |
| Operating Margin | -18% |
| Profit Margin |
-24% |
| 52-week high | $372.70 |
| 52-week low | $119.41 |
| Short Interest | 3% |
| Average Wall Street Rating and Price Target | Buy, $317.87 |
Sea Limited Forecast: Support at $118, resistance at $175
With the premarket pushing SE stock up more than 3% to near $134, it seems SE might be in for a boost from the reduction in tensions stemming from the Russia-Ukraine affair. At the time of writing NASDAQ futures are up more than 2%. The whole market, especially beaten down growth stocks, seems geared up for a rebound.
If SE stock does continue to falter, then expect shares to find support around $118, which served as support back in August of 2020. If it breaks here, it might fall as far as $102.
The more likely odds for a stock that is down 65% from its all-time high and still growing revenue at about 43% pace in 2022 is a turnaround though. Traders will return to a bullish perch once SE shares surmount the $175 range high resistance.
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
