These 2 global stocks are back in Wall Street’s good graces

The stock market rose on Tuesday, as the Nasdaq Compound (^IXIC) regained all of its losses from Monday and more. The Dow Jones Industrial Average (^ DJI 0.17%) and S&P500 (^GSPC 0.87%) have also managed to progress, although to a lesser extent.


Percent Daily Change

Daily point change










Data source: Yahoo! Finance.

Many U.S. investors don’t pay much attention to companies located overseas, but that can cause you to miss some of the best opportunities with international equities. On Tuesday, shares of the Singapore-based company Sea Limited (SE 36.05%) and Chinese media pioneer Tencent Music Entertainment Group (TME 30.56%) recorded dramatic gains, suggesting that regions of the world that have proven problematic in the past could once again be fertile ground for interesting investment ideas.

The sea makes waves

Shares of Sea Limited ended up more than 36% on Tuesday. The e-commerce platform provider released strong third-quarter financial results that helped restore confidence in the economic outlook for the entire Southeast Asian region.

Sea’s numbers showed steady progress. Revenue grew 17% year over year to $3.2 billion. Net losses remained stable compared to prior year levels, but after taking stock compensation into account, adjusted losses decreased significantly. Sea said its e-commerce sales climbed 32% in US dollars and would have been closer to 39% if measured in constant currency. Sea had 2 billion orders for the quarter, selling $19.1 billion in gross merchandise value. Digital financial services also saw huge improvement, with sales up nearly 150% and segment losses shrinking sharply.

The digital entertainment segment, however, has experienced greater difficulties. Revenue fell about 1% and bookings were down more than $50 million from the prior quarter. The number of active users also fell by more than 50 million, with paid user ratios and reservations-per-user metrics remaining flat from the second quarter.

Even with the rebound, The shares of the sea are still well below where they started the year. Still, if the company can deliver on its promise to get its Shopee e-commerce marketplace to break even in adjusted pretax operating profit by the end of next year, the stock could climb further.

Tencent plays a happy tune

Shares of Tencent Music Entertainment Group did nearly as well, jumping more than 30%. On a good day for stocks of China-based companies in general, Tencent’s quarterly financial results were strong enough to satisfy shareholders.

Tencent made the most of its business. Revenue fell 6% year-over-year to $1.04 billion, but adjusted earnings of $198 million were up 33% from year-ago levels. Tencent had 85.3 million paid users, 20% above its level 12 months ago and more than 2.6 million users in the last three months alone.

Macroeconomic pressures have impacted Tencent, with falling mobile engagement and revenue per paid user on the online music platform struggling to minimize year-over-year declines. Importantly, Tencent implemented numerous cost-cutting measures that helped boost margins and sustain profit growth even when sales slumped.

Long-term, Tencent will have to continue to evolve its emphasis on paid subscriptions. Even if it means losing some of its biggest customer base, improving profitability should continue to give shareholders greater certainty about the Chinese music giant’s prospects of becoming an entrenched part of the global music industry. music and entertainment.

Dan Caplinger has no position in the stocks mentioned. The Motley Fool holds positions and recommends Sea Limited. The Motley Fool has a disclosure policy.

Comments are closed.