Analysts call Sea’s 16.5% shares slump an ‘overreaction’

Photo credit: Glints

Shares of global tech company Sea recorded its sharpest decline in more than two years despite strong earnings, as investors took a dim view of its “conservative” 2026 profit guidance.

The counter plunged as much as 27% in intraday trading on the New York Stock Exchange on March 3, its steepest drop since August 2023, before paring some losses to close about 16.5% lower.

While Sea’s net income for the three months ended December 31 rose about 73% to US$410.9 million, it missed the US$442 million average forecast by analysts. The earnings miss, combined with management’s guidance for flat earnings in 2026, spooked a market that had priced in faster margin expansion.

However, analysts from Citi and Maybank Securities urged investors to look past the immediate volatility, arguing that the sell-off ignored the strategic logic behind Sea’s spending plans.

“We see the share price sell-off overreaction as an attractive buying opportunity for long-term investors,” Citi analysts wrote in a note on March 4, maintaining a “buy” call with a US$151 price target – down from US$184.

They contended that the conservative outlook disguises a “calculated market-share offensive” intended to entrench the company’s dominance.

Maybank analyst Hussaini Saifee echoed the sentiment, describing the guidance as “short-term pain for long-term gains.”

See also: Sea Group’s financial health in 7 charts

While Maybank retained its “buy” call, it lowered its target price from US$156 to US$127 to reflect lower margin assumptions for the next two years. Hussaini noted that the correction has left the stock trading near valuations that reflect a “worst-case AI disruption scenario.”

Building a “logistics moat”

At the heart of the strategy is an aggressive push to grow gross merchandise value by 25% in 2026, outpacing the 20% consensus estimate. To drive that volume, Sea is ramping up spending on logistics to enable same-day and next-day delivery.

A Shopee delivery worker meets his customer / Photo credit: Shopee

Shopee is advancing into “Phase 2” of its logistics road map, extending beyond simple parcel delivery into warehousing. Its aims to double or triple fulfillment penetration by the end of 2026, up from the current 2% to 3% in Brazil and high-single-digits in Southeast Asia.

Funding the moat