Why Sea (SE) Shares Are Plunging Today
Stock Story
Published Dec 11, 2023 11:14AM ET
Updated Dec 11, 2023 11:32AM ET
Why Sea (SE) Shares Are Plunging Today
What Happened: Shares of e-commerce and gaming company Sea (NYSE:SE) fell 9.6% in the morning session after reports that competitor TikTok is set to invest over $1.5 billion in a joint venture with Indonesia's GoTo Group's unit, gaining control of the entity. The collaboration involves combining Tokopedia (a unit of PT GoTo Gojek Tokopedia Tbk (GoTo Group)) and TikTok Shop Indonesia under the existing PT Tokopedia.
This move allows TikTok to resume its shopping app service in Indonesia after a temporary halt in e-commerce transactions due to regulatory changes.
As a quick recap, TikTok suspended e-commerce transactions in its TikTok Shop app in Indonesia in October 2023 following the country's ban on social commerce companies facilitating direct e-commerce payments on their platforms. This regulatory move, implemented to protect offline merchants and marketplaces, was prompted by concerns about predatory pricing by e-commerce sellers, with TikTok being specifically mentioned as a potential competitor to Sea, which operates the Shopee e-commerce platform in Southeast Asia, including Indonesia.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Sea? Find out by reading the original article on StockStory.
What is the market telling us: Sea's shares are very volatile and over the last year have had moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 27 days ago, when the stock dropped 12.3% on the news that the company reported third quarter results marked by a decline in its user base, which fell below Wall Street's expectations. The company stated that they will "prioritize investing in the business to increase our market share and further strengthen our market leadership", which is having a negative impact on profits. As a result, adjusted EBITDA missed by a large amount.
On the other hand, It was great to see Sea beat analysts' revenue expectations. That stood out as a positive in these results. Overall, the results could have been better.
Get The News You Want
Written By: Stock Story
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.