Sea Ltd's e-commerce competition continues, but the noise is fading

Overview

This report focuses on Sea Ltd's competitive landscape in the Southeast Asian e-commerce market, particularly changes in prices, coupons, and delivery fees for Shopee and TikTok Shop during April to June 2026. Bernstein's core view is that the e-commerce battle is still ongoing, but competitive noise is declining as platforms shift from aggressive subsidies toward greater emphasis on unit economics and margin protection.

Core views

The report believes that e-commerce prices in Southeast Asia mostly continued to rise this quarter, but the driver has shifted from earlier increases in post-discount listed prices to a pullback in platform coupon subsidies. Shopee has largely kept listed prices stable while reducing coupons, leading to higher actual consumer payments; TikTok Shop has also cut coupons, but cushioned the increase in end prices by lowering delivery fees. Although Shopee's price advantage versus TikTok Shop has narrowed, the report does not see this as indicating a material deterioration in competitive intensity, with Sea still maintaining lower prices or broad price parity in most ASEAN sample markets.

Analysis framework

The report uses Bernstein's proprietary price tracker to monitor the price composition of a fixed basket of goods across different platforms and ASEAN markets, comparing changes in original prices, listed discounts, listed prices, coupon discounts, delivery fees, and final consumer prices, and combining this with trends in Sea's e-commerce EBITDA/GMV margin to assess the impact of competition on profitability.

Methodology notes

• Market Competition AnalysisFixed Basket Price Tracking

  Cross-platform comparison of pricing and subsidy intensity

  By tracking changes in end prices, coupons, and delivery fees for a fixed basket of goods on Shopee and TikTok Shop across multiple ASEAN markets, the report assesses whether platform competition is shifting toward more aggressive subsidies or more rational pricing.

• Valuation MethodologyDCF

  Discounted cash flow valuation

  Bernstein values Sea Ltd using DCF, with a target price of USD 150, assuming an 11.5% discount rate, a 2% terminal growth rate, and explicit forecasts through CY35.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sea Ltd (SE.US)

  Covered company

  Strengths

  Shopee remains price-competitive in most ASEAN markets, e-commerce margins have already improved meaningfully, and platform behavior is becoming more rational.

  Weaknesses

  Its price advantage has narrowed, and there is still a trade-off between growth and margins.

  Comparison

  Versus TikTok Shop, Shopee is more inclined to raise effective transaction prices by reducing coupons, while TikTok Shop protects consumer price perception by lowering delivery fees.

  Risks

  If TikTok Shop steps up subsidies again, it could pressure Shopee's growth or margins.

• TikTok Shop

  Major competitor

  Strengths

  Reducing delivery fees to offset lower discounts helps maintain consumer price appeal.

  Weaknesses

  Its subsidy and delivery-fee strategy may weigh on platform economics.

  Comparison

  Compared with Shopee, TikTok Shop has shown more visible price improvement in some markets, especially catching up in Vietnam.

  Risks

  If competition escalates, it could reignite a subsidy war and hurt industry profitability.

Key data

• RatingOutperformBernstein maintains the rating.
• Target PriceUSD 150.00Based on DCF valuation.
• Closing PriceUSD 104.05As of 2026-07-17.
• Implied Upside44%From the report's pricing table.
• Market CapitalizationUSD 63,729mnAs of the report pricing table date.
• 52-week Range199.30/77.05In U.S. dollars.
• F25E Adjusted EPSUSD 2.71Report forecast.
• F26E Adjusted EPSUSD 3.39Report forecast.
• F25E RevenueUSD 22,938mnReport forecast.
• F26E RevenueUSD 27,489mnReport forecast.
• F26E Adjusted P/E30.7xReport valuation metric.

Impact & implications

The implication for the investment view is that if both Shopee and TikTok Shop continue to reduce subsidies and avoid an aggressive price war, Sea's e-commerce margins are likely to remain resilient and may even have room for modest expansion. The report reframes the competitive landscape from a primary risk-related noise factor into evidence supporting margin stability, and therefore maintains a positive view.

Risks

• If the Free Fire user base slows as players shift to other games, Sea's digital entertainment business will be affected.
• If the e-commerce business cannot raise take rate, or if competitors increase sales and marketing spending to defend share, margins may come under pressure.
• If digital financial services cannot expand lending and other high-margin services, earnings improvement may fall short of expectations.
• If TikTok Shop adopts a more aggressive competitive strategy, Sea's e-commerce margins may again come under pressure.

What to watch

• Subsequent changes in coupon subsidies and delivery fees at Shopee and TikTok Shop.
• Whether final consumer prices across Southeast Asian markets continue to rise moderately.
• Whether Shopee's share as the lowest-price platform in each market continues to decline.
• Whether Sea's e-commerce EBITDA/GMV margin improves again from the current plateau.
• Whether the balance between Sea's e-commerce growth and margins deteriorates.