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

Sea Limited SE continues to center its growth strategy around Shopee, its most dominant business segment. For the third quarter of 2025, the company posted another strong e-commerce performance, with revenues rising nearly 35% year over year and GMV reaching a record $32.2 billion. These results highlight Shopee’s success in deepening buyer engagement, increasing purchase frequency and steadily strengthening its monetization capabilities.

A major driver of this growth is Shopee’s strengthening core marketplace monetization. Transaction fees and advertising revenues climbed 53% year over year, led by rising take rates and strong adoption of AI-enhanced ad tools. With ad revenues jumping more than 70%, Shopee is clearly becoming more effective at monetizing its vast seller base.

However, the biggest challenge lies on the logistics side. Value-added service revenues, largely tied to logistics, declined 5.7% year over year, indicating higher net-off shipping subsidies. Meanwhile, the cost of services climbed 38.8% due to logistics investments required to sustain growing order volumes. These figures indicate mounting cost pressures even as revenues scale.

Yet Shopee has taken strategic steps to strengthen its logistics advantage. Investments in same-day and instant delivery, rural delivery networks, and Taiwan’s expansive automated locker system reinforce its operational moat. Shopee’s in-house logistics services and SPX Express now handle the majority of deliveries in key regions, enabling greater control over cost.

Shopee’s growing GMV, higher take rates and strong positions in Asia and Brazil keep it in a solid spot. Logistics and subsidy pressures are real, but its expanding in-house delivery network and better monetization give Shopee a strong base to maintain growth even as competition increases.

Sea Limited Faces Strong E-Commerce Competitors

MercadoLibre MELI remains a dominant force in Latin American e-commerce, underscoring the competitive pressure facing Sea Limited. MercadoLibre continues to scale its integrated commerce and fintech ecosystem, delivering 33% and 49% year-over-year growth, respectively. With Brazil and Mexico posting 34% FX-neutral GMV growth and 42% items-sold growth, MercadoLibre strengthens its regional leadership, intensifying the challenge for Sea Limited’s Shopee platform.

eBay EBAY remains a major global marketplace with strong penetration across mature markets, offering scale and brand trust that still shape the competitive landscape for Sea Limited. While eBay focuses on recommerce and peer-to-peer transactions, its presence in over 190 markets reinforces its relevance. However, EBAY lacks the high-growth momentum and fintech integration that Sea Limited leverages in emerging regions, highlighting contrasting strategies in the broader e-commerce arena.

SE’s Price Performance, Valuation & Estimates

Sea Limited shares have risen 28.5% year to date, outperforming both the broader Zacks Computer & Technology sector’s return of 21.1% and the Zacks Internet - Software industry’s fall of 0.1%.

SE’s YTD Price Performance

From a valuation perspective, SE stock is currently trading at a forward 12-month price-to-earnings ratio of 25.09, lower than the sector’s 27.57X. SE carries a Value Score of F.

SE’s Valuation

The Zacks Consensus Estimate for SE’s 2025 earnings is pegged at $3.60 per share, which decreased 7.7% over the past 30 days. This marks a strong 114.29% surge in earnings compared to 2024.

SE stock currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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