Sea Group’s share price swung violently after 2024 Q4 and FY results were released yesterday – going up 13.6%, before nosediving 14.3% into the red, and finally settling at 5.6% up at the end of the trading day. 

It shows investors’ ambivalence towards not exactly the set of results announced, but more on the prospects of Shopee in the face of intensified (and now renewed) competition. 

As an indication, the turnover rate (total number of shares traded versus total number of shares outstanding) of Sea’s shares yesterday was 6.1%.

Some thoughts:

1. It is a very good set of results if you look at it standalone and especially compared to the previous quarter (Q3 2023). A bit more was spent on sales and marketing, from US$918.0 million in Q3 to US$967.4 million in Q4, but GMV shot up from US$20.0 billion to US$23.1 billion QoQ. This means Shopee either became smarter in marketing and promotions, or leveraged the vacuum created by the TikTok shop ban in Indonesia for most of Q4;

2. For the former – we said earlier that Shopee’s spending on S&M in Q3 was surprising but they would learn from it and optimise very quickly – bingo. During the earnings call, an analyst actually asked about the latter, which was definitely a factor: in addition to ceasing operations in Indonesia, TikTok Shop also reigned in growth in other markets as a precaution. Many active sellers on Tiktok Shop who had stocked inventory for the Q4 festive season switched to Shopee Live;

3. We said in our thoughts on Sea Q3 2023 earnings that “TikTok Shop will find its way back to Indonesia, one way or another, sooner or later”. Indeed, despite the initial shock and confusion after the ban, TikTok Shop bounced back quickly. A deal was made to take control of Tokopedia and turn GoTo stakeholders from foes to allies. Shopee has a good warchest(US$8.5 billion cash) but TikTok parent ByteDance has a money printing machine (US$25 billion annual EBITDA, according to FT);

4. The guidance given for Shopee was… very explicit: high teens GMV growth and adjusted EBITDA turning positive. At the same time, We have a strong feeling that Sea Group doesn’t not know the full (probably evolving) intentions and ambitions of ByteDance. It is a tough fight when you do not know the full intentions of your (stronger) opponent;

5. Which leads to a bigger question: what exactly is Shopee’s moat? Chris Feng, President of Sea Group (and founding CEO of Shopee and Seamoney), mentioned a few advantages during the earnings call: 

    1. leadership (himself included) spent enough time in Indonesia (and learnt the Bahasa language); 
    2. localised management team to make the right judgement; 
    3. logistics capabilities to improve customer experience;
    4. and probably the best digital consumer credit services in the region.

6. All these are very valid advantages that served Shopee well in the (earlier) fight against Alibaba’s Lazada. TikTok Shop is a competitor of a different generation. The advantages mentioned above, when working well in sync, could deliver wonders; but they do not always work in sync. How to make it happen within a now large and complex organisation spanning across multiple markets?

7. That’s the challenge Sea Group and Shopee leadership needs to continuously work out. Southeast Asia is the core that Shopee can’t afford to lose – so nobody should underestimate the will of the leadership to fight on. They can’t exit the “full fighting mode” anytime soon;

A trivial point: many seem to be not familiar with the voice of Chris Feng. Despite Chris having a clear tone and way of talking, most transcripts we see from major sites misattribute his remarks to founder and group ceo Forrest Li. In comparison, after Grab’s earnings call, most transcripts could distinguish CEO Anthony Tan, CFO Peter Oey and COO Alex Hungate clearly.

Momentum Works will host a more detailed briefing about Shopee and its prospects after our China Live Commerce Immersion. Stay tuned! 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].


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Jianggan Li is the Founder & CEO of Momentum Works. Prior to founding Momentum Works, he co-founded Easy Taxi in Asia, and served as Managing Director of Foodpanda. The two years running Rocket Internet companies has given him a lifetime experience on supersonic implementation, and good camaraderie with entrepreneurs across the developing world. He holds a MBA from INSEAD (GMAT 770) and a degree in Computer Engineering from Nanyang Technological University. Unfortunately he never wrote a single line of code professionally - but in his first job he was in media, travelling extensively across Asia & Europe, speaking with Ministers & (occasionally) Prime Ministers. Apart from English and his native Mandarin, he is also fluent in French and conversational in Cantonese & Spanish. He tried to learn Latin (for three years) and Sanskrit (for six months) as well. In his (scarce) free time, he reads, travels, hikes and dives. Pyongyang, Tehran & Chisinau are among the interesting cities he has been to.