Sea Limited stock dips after Goldman removes from Conviction List

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Sea Limited (NYSE:SE) stock drops 4.3% after Goldman Sachs analyst Miang Chuen Koh removes the stock from Goldman’s Conviction List as the market shift toward lower risk assets with positive free cash flow and that are resilient in a post-COVID-19 environment.

The analyst made the change to adjust for consumer spending patterns normalizing, which impacts the company’s gaming, ecommerce, and fintech businesses. Koh keeps a Buy rating on the stock and cuts the price target to $300 from $460.

“While Sea (SE) remains on a growth path, with an expanding ecommerce footprint and its multiple studios finalizing games to be released in the next few quarters,” the analyst said its three business lines suggest that spending on gaming is slowing, slower economic growth is likely to limit growth for its Shopee ecommerce platform, and free cash flow is expected to remain under pressure.

The analyst’s Buy rating clashes with SA Quant rating’s Sell and compares with the average Wall Street rating of Strong Buy.

Also see: Videogame sales fall for second month in December – but wrap a record year

SA contributor Simple Investing outlines a worst case target price, but is still buying.


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