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These 2 Global Stocks Are Back in Wall Street's Good Graces

The Motley Fool logo The Motley Fool 11/16/2022 Dan Caplinger
These 2 Global Stocks Are Back in Wall Street's Good Graces © Provided by The Motley Fool These 2 Global Stocks Are Back in Wall Street's Good Graces

The stock market moved higher on Tuesday, as the Nasdaq Composite (NASDAQINDEX: ^IXIC) regained all its losses from Monday and then some. The Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) also managed to move forward, albeit by smaller amounts.


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Data source: Yahoo! Finance.

Many U.S. investors don't pay a lot of attention to companies that are located overseas, but that can cause you to miss out on some of the best opportunities with international stocks. On Tuesday, shares of Singapore-based Sea Limited (NYSE: SE) and Chinese media pioneer Tencent Music Entertainment Group (NYSE: TME) posted stellar gains, suggesting that areas of the world that have proven problematic in the past might now be fertile ground once again for interesting investment ideas.

Sea makes waves

Shares of Sea Limited finished higher by more than 36% on Tuesday. The e-commerce platform provider posted strong third-quarter financial results that helped to restore  confidence in the economic prospects for the entire Southeast Asian region.

Sea's numbers showed steady progress. Revenue climbed 17% year over year to $3.2 billion. Net losses were flat compared to year-earlier levels, but after making allowances for share-based compensation, adjusted losses narrowed considerably. Sea said its e-commerce sales climbed 32% in U.S. dollar terms and would have been closer to 39% if measured in constant currency. Sea counted 2 billion orders for the quarter, selling $19.1 billion in gross merchandise value. Digital financial services also saw huge improvement, with sales climbing nearly 150% and segment losses narrowing substantially.

The digital entertainment segment, though, saw more significant struggles. Revenue fell about 1%, and bookings declined by more than $50 million from the previous quarter. Active user counts fell by more than 50 million as well, with paying user ratios and bookings-per-user metrics staying flat compared to the second quarter.

Even with the rebound, Sea shares are still far below where they started the year. Yet if the company can make good on its promise for its Shopee e-commerce marketplace to break even in adjusted pre-tax operating earnings by the end of next year, the stock could have further to climb.

Tencent plays a happy tune

Shares of Tencent Music Entertainment Group did almost as well, jumping more than 30%. On a good day for stocks of Chinese-based companies generally, Tencent's quarterly financial results were strong enough to satisfy shareholders.

Tencent made the most of its business. Revenue sagged by 6% year over year to $1.04 billion, but adjusted profits of $198 million were up 33% from year-ago levels. Tencent had 85.3 million paying users, which was 20% above its level 12 months previously and higher by 2.6 million users in just the past three months.

Macroeconomic pressures have had an impact on Tencent, with mobile engagement falling and with revenue per paying user on the online music platform struggling to minimize year-over-year declines. Yet importantly, Tencent implemented numerous cost-saving measures that helped to boost margins and sustain profit growth even as sales sagged.

In the long run, Tencent will need to keep shifting its emphasis toward paying subscriptions. Even if that means losing some of its larger customer base, the improvement in profitability should continue to give shareholders greater assurance of the Chinese music giant's prospects to become an entrenched part of the global music and entertainment industry.


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


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