Sea Limited (SE) Post-Earnings Analysis: Reddit Bull Thesis vs Market Reality

This analysis examines a Reddit post published on November 12, 2025, at 02:36:17 EST, titled “The ‘Alibaba of Southeast Asia’ is on sale. Why I’m buying the dip on Sea Limited ($SE)” [5]. The author presents a bullish case for Sea Limited following its post-earnings decline, arguing the sell-off represents a buying opportunity based on the company’s ecosystem strength, ~40% revenue growth, and dominant position in Southeast Asian markets [5].

The market reaction to Sea’s Q3 2025 earnings was indeed significant, with the stock dropping 10.51% to $142.31 on November 11, 2025, on trading volume of 15.97M shares (nearly 4x daily average) [0]. Over the two-day period from November 10-12, 2025, the stock declined 11.73% [0]. However, the stock showed some resilience, initially falling as much as 8% in premarket trading before closing down only 2% on November 12, recovering some ground [3].

The Reddit author’s bullish thesis has merit regarding Sea’s fundamental performance. Q3 2025 results demonstrated strong across-the-board growth: revenue increased 38% YoY to $6.0 billion [4], net income rose 145% YoY to $375 million [3], and adjusted EBITDA grew 58% YoY to $874 million [4]. All three business segments delivered double-digit growth [3].

• Shopee (E-commerce)
  : GMV reached $32.2 billion (up 28.4% YoY) with revenue of $4.3 billion, beating estimates of $3.99 billion [3]. The platform achieved five consecutive quarters of sequential GMV growth [4].

• Garena (Digital Entertainment)
  : Delivered its best quarter since 2021 with bookings up 51.1% YoY, driven by successful Free Fire campaigns featuring Squid Game and Naruto collaborations [3].

• Monee (Digital Financial Services)
  : Loan book expanded 70% YoY with revenue up 61% YoY to $990 million, maintaining a stable 90-day NPL ratio at 1.1% [4].

However, the Reddit analysis overlooks several critical factors that drove the market’s negative reaction and present ongoing risks.

The sell-off was primarily triggered by:

• EPS miss
  : $0.59 vs. consensus $0.76 [3]
• Operating expense growth
  : 28% YoY increase to $2.12 billion [3]
• Sales and marketing expenses
  : 31% YoY increase [3]

Management emphasized that increased spending is strategic rather than wasteful. Key initiatives include:

• Logistics expansion
  : Automated locker network in Taiwan (2,500+ locations) reducing costs by 30% [3]
• Delivery improvements
  : Average delivery time reduced by 2 days YoY [3]
• Fulfillment capabilities
  : Building second logistics pillar through asset-light approach [4]

CEO Forrest Li stated: “We are making our buyers happier while reducing [delivery] costs” [3].

Despite the sell-off, Wall Street analysts largely defended Sea Limited:

• Deutsche Bank
  : Upgraded to Buy with price target increase [1]
• Consensus target
  : $185.00 (+29.1% from current levels) [0]
• Analyst consensus
  : 70.5% Buy ratings [0]
• Recent upgrades
  : B of A Securities (Buy), Deutsche Bank (Buy) [0]

: Sea Limited trades at 73.89x P/E ratio, which is exceptionally high even for growth stocks [0]. This elevated valuation provides limited margin for disappointment and increases sensitivity to any execution missteps.

: The Reddit post underestimates competitive pressures from TikTok Shop and Alibaba’s Lazada, which require sustained investment levels that may pressure margins [3].

: Monee’s rapid loan book expansion (70% YoY) comes with increased credit provisions (+76% YoY), raising questions about underwriting standards and potential future defaults [3].

: With 70% of revenue from Southeast Asia, investors face significant regional economic and political risk exposure [0].

: Sea maintains dominant positions across e-commerce, gaming, and digital financial services in high-growth Southeast Asian markets with favorable demographic trends.

: If management’s asset-light fulfillment strategy succeeds, it could create sustainable competitive advantages and improve long-term margins.

: The integrated ecosystem (Shopee, Garena, Monee) offers opportunities for cross-selling and user engagement that competitors struggle to replicate.

• Sustained margin compression beyond 2-3 quarters
• Deterioration in credit quality metrics (NPL ratios)
• Market share losses in core geographies
• Slowing GMV growth despite increased investment

The Reddit author’s bullish thesis on Sea Limited has merit given the company’s strong fundamentals, dominant market position in Southeast Asia, and strategic investments in logistics. The company’s Q3 2025 performance demonstrated robust growth across all segments with improving profitability metrics [3, 4].

However, the analysis overlooks significant concerns that justify the market’s cautious reaction. Sea’s high valuation multiple (73.89x P/E) combined with increasing competitive pressures and rapid credit expansion creates a risk profile that warrants careful consideration [0, 3].

The current investment cycle appears more strategic than previous periods, with management focusing on logistics efficiency and customer experience improvements. CEO Forrest Li emphasized that investments are “making our buyers happier while reducing [delivery] costs” [3]. Wall Street analysts remain largely bullish, with Deutsche Bank recently upgrading to Buy and consensus targets suggesting 29.1% upside potential [1, 0].

the post-earnings sell-off may represent a buying opportunity for long-term investors with high risk tolerance, but the investment case requires conviction in management’s ability to execute on their logistics and fulfillment strategy while maintaining credit quality in the financial services segment. The elevated valuation leaves little room for error, and competitive pressures continue to intensify across all business segments.