Sea Limited's Q3 Earnings Miss：三驾马车能否扭转局面？

Sea Limited’s performance in Q3 is quite intriguing. Although revenue increased by 38.3% year-over-year to a record high, earnings per share were only $0.78, 24.27% below expectations—such “top-line growth but not bottom-line growth” phenomena are not uncommon among internet giants. However, it is worth noting that this Southeast Asian and Latin American digital ecosystem giant’s long-term growth logic remains solid.

Why Each of the Three Growth Curves Is Exciting

E-commerce Moat Is Expanding

Shopee delivered impressive results in Q3. E-commerce revenue grew 35% to $4.3 billion, with GMV( growth reaching 28.4%. This pace still places it in the top tier of global e-commerce competitors covering Southeast Asia and Brazil. More importantly, this growth stems from two different engines: one is the steady expansion of the local Southeast Asian market, and the other is rapid penetration in Brazil. The rising contribution of advertising revenue also signals that the platform’s monetization ability is improving. Management’s outlook for 2025 is even clearer: GMV growth of no less than 25%.

Fintech’s “Dark Horse” Attribute Becomes More Evident

Monee’s performance in Q3 can be summarized as “out-of-control growth.” Revenue surged 61% YoY, driven by steady expansion of consumer loans and microenterprise lending. Interestingly, the penetration rate of SPayLater (buy now, pay later product): in mature markets, it has exceeded 30%; in emerging markets, it remains single digits but with obvious room for growth. The most surprising aspect is its off-chain business—growth of SPayLater applications outside Shopee has exceeded 300%, indicating Monee is transforming from Shopee’s “financial logistics” into an independent financial services platform. Loan quality remains stable, with low default rates, making this sustainable growth credible.

Game Entertainment’s Recovery Surpasses Expectations

If the first two are steady growth, Garena’s Q3 performance is a “V-shaped reversal.” Bookings revenue increased 51.1% YoY, and total revenue grew 31.2%. The simultaneous rise in user activity and paying conversion rates directly boosted average revenue per user. What does this indicate? Users not only returned but are willing to spend money. Management expects full-year bookings growth to exceed 30% in 2025, suggesting this strong recovery could be sustained.

The Market Has Already Made Its Judgment

Looking at stock performance, investors’ view of Sea is at least not pessimistic. Since the beginning of the year, SE’s stock price has risen 37.1%, far surpassing the industry average of 4.8%, and outperforming the broader tech sector)23.6%( and the S&P 500)16%(. Compared to peers, Meta has only gained 2.7% for the year, while many internet peers are even losing money. This indicates the market’s judgment on Sea’s “top-line growth but not bottom-line growth” is that it is cyclical rather than structural.

Analysts’ forecasts are also being revised upward. EPS for Q1 2026 has been raised to $1.49, a 73.26% increase from the same period last year. This continuous upward revision reflects renewed confidence in the company’s fundamentals.

But It’s Not All Smooth Sailing

The Competition Is Getting Fiercer

In Southeast Asia, threats from JD.com are emerging. With a strong logistics network and vertically integrated operations, JD has accumulated 700 million active annual users, with Q3 revenue up 14.9% YoY. Although growth is not as fast as Shopee, JD’s user base and supply chain efficiency are becoming long-term competitive variables.

In Latin America, MercadoLibre is the real “elephant.” As a local e-commerce + fintech platform, its market position is already solidified. Shopee can only gain market share through aggressive price wars and logistics investments—this will continue to suppress profit margins.

In gaming, Take-Two Interactive, though somewhat battered by delays of major titles, still maintains core IPs like Grand Theft Auto and NBA 2K. Garena’s competitive pressure has not eased despite rivals’ struggles.

Technical Signals Are Also Speaking

From the candlestick chart, SE has broken below the 50-day and 200-day moving averages, which usually indicates a short-term downtrend. While fundamentals remain intact, technical signals are warning investors: the rebound may be limited.

When Should You Enter?

Sea Limited’s long-term story is still unfolding—the synergy among its three business lines is still being unleashed, and the markets in Southeast Asia and Latin America are still undervalued. But the short-term phenomena of “top-line growth but not bottom-line growth,” combined with fierce competition, environmental pressures, and technical weakness, suggest caution.

The current prudent approach is: observe rather than rush in. Wait for a better entry point—perhaps after the true costs of competitive pressures are reflected, or when the company finally turns profits. Sea Limited is worth holding, but not necessarily worth chasing now.