Can SE's E-commerce Growth Survive Logistics & Subsidy Pressure?

Core Insights - Sea Limited (SE) focuses its growth strategy on Shopee, which is its leading business segment, achieving nearly 35% year-over-year revenue growth and a record GMV of $32.2 billion in Q3 2025 [1][10] E-commerce Performance - Shopee's core marketplace monetization has significantly improved, with transaction fees and advertising revenues increasing by 53% year-over-year, driven by higher take rates and the adoption of AI-enhanced advertising tools [2] - Advertising revenues surged over 70%, indicating Shopee's effectiveness in monetizing its seller base [2] Logistics Challenges - Value-added service revenues, primarily linked to logistics, fell by 5.7% year-over-year, reflecting increased shipping subsidies [3] - Service costs rose by 38.8% due to necessary logistics investments to support growing order volumes, highlighting cost pressures despite revenue growth [3] Strategic Logistics Investments - Shopee is enhancing its logistics capabilities through investments in same-day and instant delivery, rural delivery networks, and automated locker systems in Taiwan, which strengthen its operational advantages [4] - The in-house logistics services and SPX Express now manage most deliveries in key regions, allowing for better cost control [4] Competitive Landscape - Sea Limited faces strong competition from MercadoLibre (MELI), which is expanding its integrated commerce and fintech ecosystem, achieving 33% and 49% year-over-year growth in these areas [6] - eBay (EBAY) remains a significant player in mature markets, focusing on recommerce and peer-to-peer transactions, but lacks the high-growth momentum seen in Sea Limited's operations [7] Stock Performance and Valuation - Sea Limited's shares have increased by 28.5% year-to-date, outperforming the broader Zacks Computer & Technology sector's return of 21.1% [8] - The stock is currently trading at a forward 12-month price-to-earnings ratio of 25.09, which is lower than the sector's average of 27.57 [11] - The Zacks Consensus Estimate for SE's 2025 earnings is $3.60 per share, reflecting a 114.29% increase compared to 2024, although it has decreased by 7.7% over the past 30 days [14]