Bill 'Latency Lord' Brennan
Fundamental Growth Investor, B2B/Sector Leaders & Picks-and-Shovels
Sea Limited's strong execution and regained management trust make the beaten-down stock a buy here. After a rough two years following Covid, it faces less competition in its home markets than Amazon or MercadoLibre face in theirs, yet its stock trades very low. Existing holders should be loading up or question their conviction; long-term margins remain uncertain for both Sea and MercadoLibre. x.com
Sea Limited faces political risk in Brazil if Flávio Bolsonaro sees Shopee as a strategic threat. Fairly or not, Sea is somewhat linked to China, and he may take a harder line on Chinese and Asian companies flooding the market. That could mean higher taxes, compliance costs and incentives needed to stay competitive in Brazil versus today. His father once said: "The Chinese are not buying in Brazil. They are buying Brazil." x.com
Political uncertainty and Amazon competition have held MercadoLibre's stock back despite a humming business. The company is great and the stock deserves to turn, but at roughly 45 times earnings and only about 12% gained over five years, it has remained a difficult stock to own. x.com x.com x.com x.com
Sea Limited's cash generation and sales have risen sharply while its share price is back at its 2020 level. Annual free cash flow moved from negative $100 million to $4.5 billion and revenue from $2.6 billion to $22.9 billion; at $74 versus a Street consensus target above $150, it is a strong buy and undervalued. x.com x.com
Sea, MercadoLibre, Nike and Lululemon have potential but are not buys until a confirmed uptrend forms. A good company is not necessarily a great stock, and a downtrend does not reverse on one earnings beat and a few green weeks. Sea gave back all its post-earnings gains as traders took swings, shorts covered and funds bought, showing it had not bottomed. Investors should hold names already trending, with clear higher highs, and keep these on a watchlist. x.com
Sea Limited's revenue growth has far outpaced its market value, making the shares interesting at these levels. Revenue is up 150% since Q1 2022 while market cap is down 25%; a multibagger is possible. x.com x.com x.com
The market's worst-case assumptions about Sea Limited's still-unclear Monee IPO and Sea Cloud look like a classic overreaction. Around $75, Sea looks very attractive: not much needs to go right for the investment to work, anything better than the worst case becomes an opportunity, and upside is enormous if things go right. x.com
Coupang, Sea and MercadoLibre remain dead money: their charts are broken, they are still overvalued and they face too much competition. Even after recent gains in Sea, they could stay dead money from here; they might be value, but that won't be known for a couple of years, and value traps are a devastating source of capital impairment. x.com x.com
Latin American equities' sell-off looks overdone as long as the underlying businesses keep growing and fundamentals remain intact. Under that condition, the drop is market noise, and MercadoLibre and Nu Holdings could offer attractive opportunities amid the panic. x.com
Sea looks super interesting at 18x forward EPS against 30%+ EPS CAGR for 2027-2028. Past periods of heavy investment worked well for Sea, making market punishment for new investment exciting. Cloud-entry capex and limited communication, fierce competition, and uncertainty around the fintech IPO remain concerns. x.com x.com
Sea Limited isn't worth starting a position in because its pace of investment won't slow, and a quarter of higher investment could bring the stock down fast. It could run in the short term, but the medium-term risk outweighs that until there is clarity on spending. x.com
Sea could unlock value from its existing fintech and cloud assets, making the selloff look ridiculous. Forrest Li's memo says Monee could stand on its own; a separate listing could give it a valuation and growth capital, though no date or terms are set. Sea Cloud would sell infrastructure already used for Shopee and Garena, not build from scratch. Last-quarter revenue was $7.79B, up almost 50% year over year, against an 18-19 forward P/E. x.com x.com
