Sea Group Shares Plummet 22% Amid E-commerce Pivot and Intense Competition
Sea Group, the parent company of Shopee, has seen its shares plummet by 22% in the third quarter, marking its steepest decline since August. This downturn comes amidst a strategic pivot towards the stock market today, intensifying competition in Southeast Asia's slowing internet economy. Despite the challenging market conditions, Sea Group reported a 4.9% year-on-year sales increase to USD 3.3 billion, slightly exceeding the average estimate of USD 3.2 billion. However, the company returned to a quarterly loss of USD 144 million, reversing three consecutive profitable periods. This loss can be attributed to aggressive spending, with sales and marketing costs nearly doubling to USD 918 million, sparking concerns about the sustainability of Sea's high-growth stock market strategy. Forrest Li, Sea Group's founder and CEO, announced the strategic shift in August. The company is now focusing on market share and competition, directly challenging industry heavyweights like Alibaba's Lazada and TikTok Shop. The competitive landscape has further heated up with the entry of PDD Holding's Temu and the strong performance of local rival GoTo Group, which nearly doubled its net revenue in the June quarter. Sea Group's shares have taken a significant hit due to its strategic shift towards the stock market today, with the company reporting a loss and increased expenses. Despite these challenges, Sea Group remains committed to its aggressive stock market strategy, aiming to bolster its e-commerce business, particularly the Shopee platform, which accounts for 70% of its total revenue. The company faces intense competition in Southeast Asia's slowing internet economy, with new entrants and strong local rivals vying for stock market share.
