Singapore, March 4, 2026, 19:46 (SGT)
- Sea’s U.S. shares tumbled after the company warned about rising costs and a more subdued 2026 sales volume outlook for Shopee.
- Operating expenses jumped over 28% in the December quarter. Sea is relying on incentives and logistics to hold its ground.
- Citi and Maybank described the sell-off as an “overreaction”, though they cautioned that short-term profit trade-offs are once again in the spotlight.
Sea Limited’s shares sank in U.S. trading Tuesday after the Singapore-based company warned of ramped-up spending to shore up its Shopee unit and signaled a deceleration in gross merchandise value (GMV)—the sum of goods sold on its platform. Operating expenses jumped over 28% to $2.43 billion for the quarter. Marketing outlays spiked at both Shopee and the digital finance business, Monee, Sea reported. 1
This stumble comes at a tricky time for Sea. Lately, investors have started to view the company as a straightforward play on both growth and profit, with Shopee carrying most of the narrative. A spike in costs, though, prompts immediate questions: are those improvements real, or just purchased?
Timing is at play here. Sea’s ramping up both delivery speed and user perks, just as ByteDance’s TikTok Shop digs further into Southeast Asia—leaving platforms little choice but to keep spending in order to retain sellers and traffic.
Sea turned in net income of $410.9 million for the December quarter on roughly $6.9 billion in revenue, and full-year 2025 net income hit $1.6 billion. CEO Forrest Li said the company plans to “double down on operational excellence,” targeting about 25% Shopee GMV growth for 2026, with Shopee adjusted EBITDA — which excludes certain costs — set to be “no lower” than this year’s figure. 2
Executives on the earnings call highlighted stepped-up discounting, promotional perks, and additional logistics and delivery spend as Sea pushes to boost order frequency and maintain tight service standards. The company also told investors it’s leaning on artificial intelligence (AI) to sharpen search and ad systems — both areas that could affect margins if advertising demand stays solid.
Sea finished the day down roughly 16.5% in New York, after plunging as much as 27% earlier—marking its sharpest slide since August 2023. Citi analysts labeled the rout an “overreaction.” Over at Maybank Securities, Hussaini Saifee saw “short-term pain for long-term gains,” although his team still trimmed their target price. 3
Shopee posted 4.0 billion gross orders for the quarter—a 30.5% jump—along with $36.7 billion in GMV, according to Sea. Core marketplace revenue, covering both transaction fees and ads, climbed 50.2% to $3.6 billion.
Monee posted $1.1 billion in revenue, a 54.3% surge, while consumer and small-business loans on its books rose to $9.2 billion. Non-performing loans—those overdue by more than 90 days—remained at 1.1% of total loans outstanding, according to Sea.
Garena bookings climbed 23.8%, hitting $672.4 million, as the number of quarterly paying users increased 15% to 58 million. Sea reported that through 2025, Garena averaged daily connections with over 100 million players.
Sea disclosed a fourth-quarter buyback of 116,200 shares, spending $14.5 million as part of its $1 billion repurchase plan. Apart from its Shopee EBITDA goal, the company offered no additional profit targets by segment, so investors are left guessing just how far Sea will push on spending.
The approach leaves little room to slip. Should spending on incentives and shipping upgrades outpace gains in repeat orders and ad revenue, Shopee risks seeing its profits stall once more. A slip in credit quality would also cast Monee’s surging loan book in a very different light.
At this point, Sea wants investors to brace for a rougher battle over customers and more consistent, rather than soaring, profits. Coming quarters will reveal if its logistics and ad-tech bets can secure lasting market share, or simply drive up costly sales.
