Wednesday morning, Sea Limited – an internet and mobile platform company offering online gaming services – released its 3rd quarter earnings report. While the company is deep in the red and continuing its perpetual downfall in share price, analysts and investors alike are high on the stock.

The stock rose over 30% after the earnings release. And recently, the Bank of Nova Scotia took a huge stake in the company itself. Meanwhile, one JPMorgan analyst raised their price target on SE stock.

Sea Ltd (SE) chart by VectorVest Mobile

What are these parties seeing in the stock – and should you follow suit and enter your position in Sea Ltd? There are two red flags we’ve uncovered through the VectorVest stock analysis software that you need to see, first. Before we unveil those to you, let us break down the earnings release and provide a bit of context to the conversation.

In the quarter ending September, the adjusted EBITDA loss fell to a whopping $358 million. This is more than double the loss they took in the same quarter in 2021 – $166 million.

CEO and chairman Forrest Li states that change is on the horizon, though. The focus and mindset within Sea ltd. has shifted from growth to self-sufficiency and profitability. As if this goal wasn’t enough of a challenge, Li states that the company will achieve this with no external funding whatsoever.

The first step in their efforts to turn the tide was laying off 10% of the company’s workforce – or 7,000 employees. Moreover, the top executives at the company will forego salaries until the company reaches a satisfactory level of self-sufficiency.

As mentioned earlier, the result of this news sent shares up more than 30% – raising plenty of question marks. What’s even more perplexing is the JPMorgan upgrade this company received Thursday. Analysts raised their price target on the stock from $70 to $75. Are these institutions and analysts seeing something that everyone else is missing – or are there other motives for the upgrades?

SE stock sits at just $57.03 today after dropping over 5% in Friday’s morning trading. In the past year, the stock is down over 80%. This begs the question – is there any reason to keep holding on hope for SE, or is time for investors to cut losses? If you’ve been following the news around SE stock, you may be wondering if you yourself should buy.

No need to listen to the noise or make emotional decisions. The VectorVest system has insights to help you make your next move with confidence. There are two major red flags you need to see…

SE Stock Has Very Poor Upside Potential & Poor Safety

The VectorVest system will change the way you trade the stock market. You can gain all the insights you need to make an informed decision on a stock and win more trades with just three simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).

Interpreting these ratings is straightforward – they sit on a scale of 0.00-2.00. Ratings over the average of 1.00 indicate overperformance and vice versa. But the best part is that based on these three ratings, VectorVest provides you with a clear buy, sell, or hold recommendation for any given stock, at any given time. And here’s what’s going on right now with SE:

  • Very Poor Upside Potential: Relative value looks at a stock’s long-term price appreciation potential 3 years out. Right now, the RV rating for SE is very poor at just 0.25. Moreover, the stock is overvalued at the current price of $57.03. The current VectorVest value is just $11.49.
  • Poor Safety: An indicator of risk, relative safety analyzes a company’s financial consistency and predictability, debt-to-equity ratio, and business longevity. And the current RS rating of 0.69 is poor for SE stock.
  • Good Timing: The relative timing rating analyzes a stock’s price trend day over day, week over week, quarter over quarter, and year over year. It takes into account the direction, dynamics, and magnitude of that trend. And right now, the RT rating of 1.16 is good – following the jump this stock saw earlier in the week. However, it appears this trend is reversing – so investors should keep an eye on this rating and watch for it to fall below 1.00.

All of this considered, the overall VST rating for SE stock is poor at 0.83. Does that mean it’s finally time to cut losses if you’re currently invested – or should you keep holding to see what happens the rest of the year? Get a free stock analysis here and VectorVest will provide you with a clear answer!

Sea Ltd (SE) stock analysis by VectorVest

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Use VectorVest to Analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. As for SE, it is overvalued with very poor upside potential and poor safety – but for the time being, the timing is good.

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