The price of Sea Limited will have its 2024 rally tested by earnings on Tuesday.
SE – Daily Chart
SE stock reversed a recent sell-off to $55, which will be supported to hold the rally this year.
Singapore-based Sea is expected to report its second-quarter results on Tuesday, and due to increased competition, the company could face pressure.
The earnings per share estimate is $0.47, which is 13% lower than last year. The revenue estimate is $3.72 billion, up 20%.
“Incremental increases in competition are now likely to cap positive earnings revisions and share price in the near-term, in our view,” said J.P. Morgan analysts Ranjan Sharma and Alex Yao back in June.
They said that the company faces competition from TikTok and Temu. Also, in July, the Indonesian regulatory agency hit the Indonesian e-commerce company’s unit with alleged antitrust violations.
Shopee may struggle to keep up with market growth as new players gain traction. However, due to more positive consumer sentiment, Shopee should still see growth.
Shopee has raised commissions to merchants in many core markets by about a third since January to boost its finances. The company still believes it can retain merchants in key markets despite competition from TikTok, Temu, and Lazada.
Commissions are now higher than those of its rivals, with its fee in Thailand rising to as much as 13% in July from 10%. TikTok charges around 8%, and Lazada up to 10%. The commissions, or take rates, are applied as a percentage of a product’s sale price.
PDD Holdings Temu and TikTok have quickly gained users, which could be risky for Shopee. Sea is expected to return to profit in the second quarter. However, investors will want to see if the e-commerce arm can raise fees without losing market share.
The company has been cutting costs sharply, and investors will also want to see that revenue from online retail can grow.
