Sea Earnings: Raising Fair Value by 7% on Breakeven Guidance, but Heavy Risks and Questions Remain

We are raising our fair value estimate for Sea by 7% to $47 from $43 after it provided an outlook of adjusted EBITDA breakeven in second half 2024 while guiding to double-digit 2024 growth for gross merchandise volume. Our new fair value reflects a more upbeat outlook. Still, we also believe there are significant risks attached to its guidance where the market will significantly correct itself if Sea appears unable to meet its target. Despite the upbeat outlook, Sea failed to provide, in detail, its bridge to profitability, which leads us to believe it may encounter some challenges in meeting its guidance.