SE bullish gapI am interested in this big, yawning gap seen on the chart. This morning the stock generated very high interest (highest volume day YTD). But there was resistance from the Fib level, from the 200-day SMA, and from the prior high to overcome, and ultimately the stock failed to close above the Oct 17, 2023 high. Still, on an overall flat-to-down day the stock advanced by 2%+.
I think some support came from the earnings release by CPNG, which is a comparable stock, also operating in East Asia. I own shares in both names, as I believe there can be multiple winners in the region. I like CPNG for its better margins, and SE for its better geographic diversification and the strong demographic growth in its retail foorprint. BABA is another name to consider and definitely the value leader, but China holds extraordinary political risks, especially for Western investors.
From a fundamental side, I think SE is a show-me stock. Times have changed, and I don't think that notoriously unprofitable companies will be able to sustain high valuations. So, in the coming earnings report I will need to see SE continue to profitably grow their digital finance business (sea money), while stabilizing revenue *and* EBITDA in online entertainment (Garena). And I want to see margins improve in e-commerce (Shopee).
If the earnings report confirms my optimism, I will continue to build my (currently half-size) position on whatever pullbacks present themselves. Otherwise, I might sell and jump ship to BABA.
