Sea Limited's U.S.-listed ADRs surged 13% in pre-market trading on May 12, 2026, following a first-quarter earnings report that showed revenue surging past analyst expectations despite a slight miss on earnings per share. The company reported revenue of $7.10 billion, exceeding the consensus estimate of $6.46 billion by over $600 million. However, earnings per share came in at $0.67, ten cents below the forecast.
The strong revenue performance was driven by robust growth across all three of Sea's core businesses: Shopee, Garena, and Monee. Shopee posted record gross merchandise value (GMV) of $37.3 billion, up 30.2% year-over-year, and orders climbed 29.3% to 4.0 billion. Garena had its strongest quarter since 2021, with bookings up 20.1% to $931.4 million, while Monee's revenue jumped 57.8% to $1.2 billion, with its loan book expanding 71.3% to $9.9 billion.
Despite the top-line beat, concerns about rising costs and margin pressures persist. Shopee's adjusted EBITDA fell to $223.2 million from $264.4 million a year ago, as cost of revenue outpaced revenue growth. The company's sales and marketing spend for Monee more than doubled, and the credit loss provision jumped 65.1% to $465.5 million. These factors contributed to the EPS miss and highlight the ongoing battle Sea faces against competitors like TikTok Shop, Lazada, and Temu.
CEO Forrest Li described the quarter as a 'strong start' and emphasized the company's focus on maintaining financial discipline while 'leaning in' to growth opportunities. The company also repurchased 1.8 million shares for $168.4 million in the last quarter, signaling confidence in its long-term prospects.
The market's reaction suggests that investors were relieved by the strong revenue growth and better-than-feared cost controls, particularly after a rough March when shares sank about 25% following warnings of escalating operating costs and softer GMV projections. However, the bear case remains: Sea's growth is heavily dependent on continued heavy spending, and the competitive landscape in Southeast Asia shows no signs of easing.
Macroeconomic factors were not a major driver of the stock's move, as traders on Polymarket see a 97% chance of the Fed holding rates steady in June and a 59% probability of no cuts in 2026. Instead, the rally appears to be a post-earnings re-rating tied to the company's own performance.
Looking ahead, Sea's partnership with Google on AI tools, including a Shopee shopping-agent prototype, was highlighted by management as a potential differentiator. But the real focus for investors will be whether the company can sustain its growth trajectory while managing costs effectively in the face of fierce competition.
