• Sea Ltd’s (SE) share price has dropped ~15% in the last two weeks prompting concerns about sector competition from TikTok Shop (TTS).
• Shopee’s GMV is growing near 20%, but TTS is growing much faster in our estimates.
• SE’s e-commerce business trading at just 1.1x EV to 12month sales vs e-commerce peers trading near 2.5x. Maintain BUY on SE with unchanged TP of USD205. A potential exit of Lazada be the key catalyst for a stable duopoly in SE Asia.

SE’s share price has dropped ~15% in the last two weeks prompting investors concerns. We think that the stock could have dropped due to Momentum Works report indicating that (i) TikTok Shop (TTS) catches up with Shopee in parcel volume in Southeast Asia (2) Shopee’s defence puts more focus on instant delivery.

https://thelowdown.momentum.asia/momentum-works-10-predictions-for-southeast-asia-2026/

Shopee’s GMV is  growing near 20%, but TTS is growing much faster in our estimates. We think that parcel-value at TTS is much lower than Shopee. TTS is doing particularly well in countries like Vietnam and Thailand. For example, Vietnam GMV is estimated to be grow 35% in 2025 much faster than other markets.  Shopee’s market share in Vietnam has dropped to 52% vs  64% in 2024 with TikTok’s share rising to 41% vs 28% earlier as per e-commerce data platform Metric. Lazada & Tiki’s combined share halved to just 3% suggesting an exit sooner or later.

Consensus projects slightly higher margins for Shopee in FY26F although we can’t rule out flat margins if TTS continues to be aggressive. Consensus projects adj EBITDA to GMV of 0.9% in FY26F for Shopee vs 0.7% in FY25F. However, Shopee’s FY26F margins could remain flat in FY26F if TTS continues to be aggressive in 2026.  Sea Ltd’s share price already reflects the negatives though. SE’s e-commerce business is trading at just 1.1x EV to 12month sales vs e-commerce peers trading near 2.5x. A potential exit of Lazada with just 10-15% market share in SE Asia could be the key catalyst for the sector competition to turn benign in our view.