Company Reports

Sea's second-quarter revenue and adjusted EBITDA increased 48% and 11%, respectively. Sea thinks that Shopee's adjusted EBITDA/GMV of 2%-3% is within reach. Monee's loan book rose 62%, versus EBIT growth of 15%, due to high sales and marketing expenses growth and provision.

Sea maintained its 2026 guidance of around 25% gross merchandise volume growth, positive bookings growth, and flat adjusted EBITDA, despite first-quarter growth of 30% in GMV, 20% in bookings, and 9% in adjusted EBITDA. Shares rose 13%.

For 2026, Sea targets around 25% year-on-year gross merchandise volume growth and adjusted EBITDA no lower than that of 2025. Management expects the effective tax rate to rise to the mid- to high 30s as some entities have turned profitable. The shares closed down 17% on March 3.

We expect Shopee to be Sea’s main valuation driver for the long term. E-commerce as a percentage of retail sales was 4%-29% in major Southeast Asian economies as of August 2025 as per eMarketer, behind China's 52% and the UK's 31%, leaving ample room for incumbents and new entrants to expand. We expect Shopee’s gross merchandise volume in Southeast Asia, Taiwan, and Latin America to grow at a 16% compound annual growth rate during 2025-34.

J&T Express, a main logistics provider for Sea e-commerce's peers, reported a 74% surge in parcel volume in Southeast Asia in the fourth quarter. Much of the growth was driven by TikTok Shop. Consultancy firm Momentum Works projects that TikTok will rival Shopee in parcel volume by 2026.

We expect Shopee to be Sea’s main valuation driver for the long term. E-commerce as a percentage of retail sales was 4%-29% in major Southeast Asian economies as of August 2025 as per eMarketer, behind China's 52% and the UK's 31%, leaving ample room for incumbents and new entrants to expand. We assume Shopee’s gross merchandise volume, or GMV, in Southeast Asia, Taiwan, and Latin America to grow at 16% CAGR during 2025-34.

Shopee's EBITDA margin declined to 4.3% in the third quarter from 6.0% sequentially. Digital financial services margin fell to 26.1% from 28.9% due to interest rate cuts in Malaysia and Thailand, promotional activity, and shifts in geographic and product mix.

Shopee's gross merchandise volume, or GMV, grew 25% year on year in the first half, while digital financial services, or DFS, revenue rose 64%. Sea now expects Garena's 2025 bookings to grow by over 30%.

We expect Shopee to be Sea’s main valuation driver for the long term. E-commerce as a percentage of retail sales was only 10% in Southeast Asia in 2023 as per eMarketer, leaving ample room for incumbents and new entrants to expand. We assume Shopee’s gross merchandise volume, or GMV, to grow at 10% CAGR during 2023-28, versus eMarketer’s projection of 8% for Southeast Asia.

Sea's first-quarter adjusted EBITDA exceeded LSEG consensus by 37%, while revenue was in line. Garena's year-on-year bookings growth accelerated sequentially to 51% from 19% in the previous quarter. The shares closed 8% higher on May 13.

Sea's fourth-quarter sales grew 37% year on year, and EBIT increased 51% sequentially. Gross merchandise volume, or GMV, grew 28% in 2024, above its mid-20s guidance.

We expect Shopee to be Sea’s main valuation driver for the long term. E-commerce as a percentage of retail sales was only 10% in Southeast Asia in 2023 as per eMarketer, leaving ample room for incumbents and new entrants to expand. We assume Shopee’s gross merchandise volume, or GMV, to grow at 10% CAGR during 2023-28, versus eMarketer’s projection of 8% for Southeast Asia.

We transfer coverage of Sea with a fair value estimate of USD 159 per ADS, representing an EV/EBITDA of 56 times in 2025. Despite the seemingly high multiple, we think shares are undervalued for long-term investors primarily attributed to the long-term growth potential for Shopee and the digital finance services segment, or DFS. We expect operating profit to grow at a 48% CAGR in the coming decade,

We expect Shopee to be Sea’s main valuation driver for the long term. E-commerce as a percentage of retail sales was only 10% in Southeast Asia in 2023 as per eMarketer, leaving ample room for incumbents and new entrants to expand. We assume Shopee’s gross merchandise volume, or GMV, to grow at 10% CAGR during 2023-28, versus eMarketer’s projection of 8% for Southeast Asia.

We are raising our fair value estimate for Sea by 65% to $109 per share from $66 after it posted impressive third-quarter 2024 revenue of $4.3 billion, representing a 31% increase year over year. Adjusted operating margin also increased 760 basis points to 4.9% during the same period as Sea finally showed the ability to achieve gross merchandise volume growth concurrently with increasing profitability. We believe this reflects an inflection point and structural change for Sea as it appears to have addressed the underlying issue that tempered our outlook, where the company was unable to achieve robust growth without compromising profitability on its platform and vice versa. We think Sea has partially resolved the issue by increasing monetization rates from the sellers on the platform, as well as increasing the ad load and charging higher fees for advertising on the platform. GMV grew 25% year on year, while e-commerce revenue increased by 41%. Profitability was driven by lower sales and marketing expenses, which declined 4% year over year, and an increase in monetization rate of 160 basis points at the same time to 12.7%.

We expect the Shopee e-commerce platform to be Sea’s main growth driver for the long term; the company’s valuation will be predicated on this business. We estimate Shopee has 30% share of its main market, Indonesia, and we estimate about 30%-35% share in the rest of Southeast Asia. It has built leading market share quickly using subsidies, free shipping, and incentives that attracted consumers to its platform, but in the process it incurred heavy cash burn and has not yet seen positive EBITDA. While positive macro signs exist and Shopee enjoys a market-leading position currently, we believe that it is too early to tell who the ultimate long-term winners will be. E-commerce is still in the early stages in Southeast Asia, but Shopee competes with other large platforms such as TikTok, Temu, and Lazada. As user growth has been highly contingent on subsidies that heavily increased sales and marketing expenses, we are concerned that growth could decelerate sharply once these incentives stop and when Sea becomes more focused on profitability.

We raise our fair value estimate to $66 per share from $60 for no-moat Sea after the firm lifted its gross merchandise volume, or GMV, guidance for its e-commerce business, Shopee, to mid-20s growth from midteens on a two-year compound annual growth rate basis from 2023-25. Sea also gave an updated margin outlook of 2%-3% in the midterm for Shopee and expects positive EBITDA for the unit next quarter. Despite raising our valuation due to better guidance, we believe shares could see greater volatility due to increasing competitive risks in the industry, which could lead to a higher probability of missed expectations. The stock rose 11% after the earnings, likely reflecting higher GMV forecasts, but we believe investors are focusing too much on its GMV growth and overlooking competitive threats and potential volatility.

We expect the Shopee e-commerce platform to be Sea’s main growth driver for the long term; the company’s valuation will be predicated on this business. We estimate Shopee has 30% share of its main market, Indonesia, and we estimate about 30%-35% share in the rest of Southeast Asia. It has built leading market share quickly using subsidies, free shipping, and incentives that attracted consumers to its platform, but in the process it incurred heavy cash burn and has not yet seen positive EBITDA. While positive macro signs exist and Shopee enjoys a market-leading position currently, we believe that it is too early to tell who the ultimate long-term winners will be. E-commerce is still in the early stages in Southeast Asia, but Shopee competes with other large platforms such as TikTok, Temu, and Lazada. As user growth has been highly contingent on subsidies that heavily increased sales and marketing expenses, we are concerned that growth could decelerate sharply once these incentives stop and when Sea becomes more focused on profitability.

We raise our fair value estimate for Sea by 28% to $60 per share after better-than-expected first-quarter revenue, gross merchandise volume, or GMV, and operating margin. Our valuation increase is driven by a less gloomy outlook for the gaming business, Garena, as well as slightly higher monetization and lower marketing expense forecasts for the e-commerce business, Shopee. The company’s revenue of $3.7 billion was 8% higher than our estimate, but more importantly, Sea was able to increase GMV by 36% year on year while raising its monetization by 40 basis points sequentially, with marketing expenses being 13% less than our forecast. We lowered our marketing expenses by 17% on average for the next 10 years, which contributes most of the valuation change.

We expect the Shopee e-commerce platform to be Sea’s main growth driver for the long term; the company’s valuation will be predicated on this business. We estimate Shopee has 30% share of its main market, Indonesia, and we estimate about 30%-35% share in the rest of Southeast Asia. It has built leading market share quickly using subsidies, free shipping, and incentives that attracted consumers to its platform, but in the process it incurred heavy cash burn and has not yet seen positive EBITDA. While positive macro signs exist and Shopee enjoys a market-leading position currently, we believe that it is too early to tell who the ultimate long-term winners will be. E-commerce is still in the early stages in Southeast Asia, and outside of a slight lead in market share, we do not see obvious distinct advantages for Shopee. As user growth has been highly contingent on subsidies that heavily increased sales and marketing expenses, we are concerned that growth could decelerate sharply once these incentives stop and when Sea becomes more focused on profitability.