Sea Forest Surges 25% on ASX Debut: Should You Chase or Wait for Pullback?

Sea Forest (ASX: SEA) delivered one of the strongest ASX IPO debuts of 2025, surging 25 percent to $2.50 in its first day of trading after raising $20.5 million at $2.00 per share. The Tasmanian climate-tech company produces seaweed-based livestock feed additives that reduce cattle methane emissions by up to 80 percent while improving meat yield. With celebrity backers including Hamish and Zoë Foster Blake alongside institutional support from Macquarie Infrastructure, the key question for investors is whether to chase at current levels or wait for the pullback that history suggests is coming.

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Sea Forest’s Commercial Reality Behind the ESG Story

What separates Sea Forest from many early-stage climate plays is genuine commercial traction. In our view, this is the most important factor supporting the investment case.

The company’s SeaFeed product replicates the bioactive properties of Asparagopsis seaweed, scientifically proven to slash methane emissions while boosting livestock productivity. Current agreements cover approximately 100,000 head of livestock, with discussions underway for an additional 700,000 heads. This suggests meaningful demand exists beyond pilot programmes.

On listing day, the company announced a fresh supply deal with Providore Global for 12,000 cattle in western New South Wales. We believe this timing was deliberate, signalling to new shareholders that commercial momentum continues building.

The European market is also opening through a distribution partnership with Orffa, while IPO proceeds will fund new facilities across Queensland, New South Wales, Western Australia, and South Africa. This expansion strategy indicates management confidence, though it will consume cash for years before generating returns. For investors, this commercial foundation is encouraging. Unlike many pre-revenue climate plays, Sea Forest is already generating sales and building real customer relationships.

What the $112 Million Market Cap Implies

At $2.50 per share, Sea Forest commands a market capitalisation of approximately $112 million. In our view, this valuation already prices in substantial future success.

Investors should weigh several risks that could impact returns:

– Pre-profit reality – Cash burn will continue as facilities are built, meaning dilutive capital raises remain possible if growth stalls

– Unproven at scale – Commercial cultivation is far more challenging than trials, and execution missteps could delay revenue targets significantly

– Competition risk – If the market proves valuable, well-funded competitors will emerge, potentially squeezing margins
The 25 per cent first-day premium suggests much near-term optimism is already captured in the share price.

The Investor’s Takeaway

We believe this is classic watch-and-wait territory. History shows most ASX IPOs that pop 20 per cent or more on day one tend to give back gains within three to six months as initial excitement fades. This pattern suggests patience may be rewarded.

For investors who missed the IPO allocation, chasing at $2.50 carries elevated risk. A pullback to $2.10-2.20 would offer a more attractive entry point with better risk-reward.

For those who received IPO shares at $2.00, taking partial profits at current levels locks in a 25 per cent gain while maintaining exposure to the long-term story.

For long-term climate investors, a small position could be justified, but position sizing should reflect the speculative nature. A maximum of one to two per cent of the portfolio seems prudent given the early-stage risks.
The climate-tech tailwinds are real, and Sea Forest’s commercial progress is encouraging. But at today’s valuation, much of the near-term upside appears already captured.