Shorts sellers square off with analysts over still in the red Sea

(Feb 27): Sea, operator of Southeast Asia’s biggest gaming platform, has had a rough start as a public company.

The much-heralded Singapore-based company raised about US$1 billion ($1.3 billion) in an October initial public offering led by Goldman Sachs Group Inc., Morgan Stanley and Credit Suisse Group AG. The shares have tumbled almost 20 percent since then and losses are widening. When the company reports results Wednesday, it’s projected to lose US$201 million in the three months ended in December, more than double the net loss a year earlier, according to data compiled by Bloomberg. Revenue probably increased 75% to US$154.5 million.

Analysts are unperturbed. Every single one of the seven who cover the company recommend buying its shares, according to Bloomberg’s data, with an average target price about 50% higher than Friday’s close of US$12.16. That sets up a looming confrontation with short sellers, who are betting the stock will fall. The short position hit a record 6.3 million shares at the end of January.

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