Shopee owner Sea raises forecast after sales beat estimates; shares jump
The forecast hike suggests Shopee is managing to ward off fierce competition from TikTok, Lazada and Temu.
Sea Ltd., the Singapore-based tech giant behind e-commerce platform Shopee, has raised its earnings forecast for online-retail arm Shopee after its sales surpassed analysts' expectations. This strong performance comes as a sign of resilience against competitors like Alibaba Group Holding and ByteDance's TikTok, who are also vying for market share in Southeast Asia's rapidly expanding e-commerce sector.
The company's US-listed stock surged 13% in response to the forecast, which now predicts US$1 billion (S$1.3 billion) in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for Shopee in 2026. Previously, Sea had only forecast at least US$880.6 million, with analysts expecting US$980.7 million on average.
Shopee's ability to fend off competition is bolstered by its robust advertising business, which contributed to a 70% increase in revenue during the second quarter. The company's CEO, Forrest Li, expressed confidence that there are further opportunities to increase its take rate—the share of merchandise sales earned as revenue. In the second quarter, Shopee's overall revenue surged 48% to US$7.8 billion, exceeding the average analyst estimate of US$7.1 billion.
Adjusted EBITDA for the quarter grew by 11% to US$917 million, while Shopee's earnings on that basis increased by 12% to US$255 million.
Sea's stock-price gain has essentially erased the company's losses for the year, following a 10% decline in shares from August 10. The investment in AI technology reflects Sea's ambition to reach a trillion-dollar market capitalization, should it succeed in doubling down on artificial intelligence. CEO Li recently released a generative-AI companion chatbot named Migoo across multiple regions, including the US, marking one of the company's most significant AI investments yet.
While Shopee has also been increasing development spending and making structural shifts, it recently cut hundreds of developer jobs globally, which some are speculating may be linked to its AI initiatives.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
