Sea's operations and financials look great. Yet, as you said, the share price declined 4% on the earnings announcement. None of what you wrote tells us what the share price should be. How would you come up with a valuation that you think is justifiable?
Company valuation for fast-growing companies is probably one of the most important but also most difficult things to do. In know about the Discounted Cash-Flow model. It helps, but it's not the answer.
Thanks for reading. Sea share price is up 55% YTD so not a huge suprise that it declined after earnings. I don’t try to predict the share price in the short term or use price targets as it is guess work in my opinion. However, I do believe that this company has the potential to reach 1 trillion market cap in the next decade. Time horizon is important here.
I don't disagree with you about Sea. But as I said, what I'm really interested in is your strategy for evaluating fast-growing companies. E.g., you say that you *believe* that Sea has "the potential to reach 1 trillion market cap in the next decade." I'm not challenging you on that, but what I really want to know is the basis/justification for that belief.
Also, a decade is a *very* long time. What about, say, 3-5 years -- and why? Again, I'm not asking for a target price; I'm asking for your approach to analyzing the company.
Ultimately a 1 trillion future valuation comes down to a valuation multiple. The current P/S ratio is about 18. Let's say that a conservative long term ratio is about 10. On that basis Sea would need to achieve 100 billion in revenue to achieve this valuation. The revenue for 2021 is expect to be $10 billion. I think 100 billion is achievable in the long run (not in the next 3 - 5 years). For comparison, Amazon will do almost $500 billion in revenue in 2021.
Sea's operations and financials look great. Yet, as you said, the share price declined 4% on the earnings announcement. None of what you wrote tells us what the share price should be. How would you come up with a valuation that you think is justifiable?
Company valuation for fast-growing companies is probably one of the most important but also most difficult things to do. In know about the Discounted Cash-Flow model. It helps, but it's not the answer.
Thanks for reading. Sea share price is up 55% YTD so not a huge suprise that it declined after earnings. I don’t try to predict the share price in the short term or use price targets as it is guess work in my opinion. However, I do believe that this company has the potential to reach 1 trillion market cap in the next decade. Time horizon is important here.
I don't disagree with you about Sea. But as I said, what I'm really interested in is your strategy for evaluating fast-growing companies. E.g., you say that you *believe* that Sea has "the potential to reach 1 trillion market cap in the next decade." I'm not challenging you on that, but what I really want to know is the basis/justification for that belief.
Also, a decade is a *very* long time. What about, say, 3-5 years -- and why? Again, I'm not asking for a target price; I'm asking for your approach to analyzing the company.
Ultimately a 1 trillion future valuation comes down to a valuation multiple. The current P/S ratio is about 18. Let's say that a conservative long term ratio is about 10. On that basis Sea would need to achieve 100 billion in revenue to achieve this valuation. The revenue for 2021 is expect to be $10 billion. I think 100 billion is achievable in the long run (not in the next 3 - 5 years). For comparison, Amazon will do almost $500 billion in revenue in 2021.
Here is an analysis of SEA. (https://www.acouplecents.com/why-has-sea-limited-se-dropped-10-this-month/) It includes a valuation made 6 months ago. See what you think. Bottom line: it's a wonderful company, but it's too expensive to make sense as an investment.