I want to ask for any advice regarding how you would analyse earnings realeases during earning season, and the revenue guidance.
The past few earnings season, I've notices a few things about the market that baffles me.
I'm going to use SEA Limited (SE) as an example. I've recently bought the share at 150+, which I thought was a good entry point. *note: this was before Russia's invasion of Ukraine, so in hindsight, there would have been a better entry point.
Yesterday was the Q4 2021 earnings release for SEA.
Personally, I found the earnings acceptable as an investor, and the slow down in Digital Entertainment (DE) was as expected.
The growth in the E-commerce (Shopee) & Digital Financial Services (DFS) in Q4 was (TO ME) very good.
The FY2022 guidance for GAAP revenue for all 3 segments:
DE: $2.9 to $3.1 Billion USD
EC: $8.9 – $9.1 Billion USD
DFS: $1.1 – $1.3 Billion USD
What I want to ask is, even though the slow down in DE was already expected, why do investors still act as if it was unexpected. The revenue forecast for EC & DFS were also strong.
The slow down in gaming was already understood to be possible & already happening. So to me, it was reasonable. Although not great, it was something I completely expected.
The world is already transitioning towards reopening, and every investor should have expected this decline in gaming bookings, right??
The e-commerce & financial services showed great growth. And its forecast were also pretty robust. Even though the company is facing some headwins with India banning FreeFire & its recent exit from France.
I believe it won't have much impact, because FreeFire is already played by a large portion of the Indian sub continent, and France was only a nascent market that was in trial phase which won't have much impact on existinf growth in LATAM.
But investors reacted by selling the stock as if they expected something totally different. Why is this.
Can someone explain this to me. As someone who has done his DD, i think it was a good quarter.
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