This Unstoppable Stock Is Crushing the S&P 500 in 2025, and Here's Why It's Probably Going Higher

Core Viewpoint - Sea Limited is experiencing significant momentum in its business, with a stock increase of 66% in 2025, outperforming the S&P 500 index, which is up by 10% year to date [1][2]. Business Segments - Sea Limited operates in three main segments: e-commerce (Shopee), digital financial services (Monee), and digital entertainment (Garena) [1][4]. - Shopee is the largest e-commerce platform in Southeast Asia, processing 3.3 billion orders valued at $29.8 billion in Q2 2025, representing a 28% year-over-year increase [4]. - The Monee platform, which provides loans to merchants and consumers, saw its loan book grow by 90% to $6.9 billion in Q2, driven by 30 million active users [5]. - The digital entertainment segment reported 664.8 million active users in Q2, marking the third consecutive quarter of growth, indicating a potential recovery from previous declines [6][7]. Financial Performance - Sea generated $5.3 billion in total revenue during Q2, a 38.2% increase from the previous year, accelerating from 29.6% growth in Q1 [8]. - Revenue breakdown for Q2 includes: - E-commerce (Shopee): $3.8 billion, 33.7% growth - Digital Financial Services (Monee): $882.8 million, 70% growth - Digital Entertainment (Garena): $559.1 million, 28.4% growth [9]. - The total adjusted EBITDA surged by 85% year-over-year to $829.2 million, with the digital financial services and digital entertainment segments contributing significantly to profitability [10][11]. Valuation and Future Outlook - Sea's stock is currently trading 51% below its 2021 peak, with a price-to-sales (P/S) ratio of 5.4, which is more reasonable compared to its historical average of 9 [12]. - Wall Street estimates suggest Sea's annual revenue could reach $26.4 billion by 2026, implying a forward P/S ratio of 3.6, indicating potential for a 104% stock price increase over the next 18 months [14]. - The company holds $10.6 billion in cash and equivalents, providing financial flexibility for further investments and growth [15].