Despite a remarkable 54% surge in Sea’s shares in 2025, Salgaonkar noted that the stock has been relatively range-bound in recent months. It experienced a 10% decline on Wednesday, primarily due to concerns regarding its expansion in Latin America and a slower margin uptake attributed to ongoing investments. However, Salgaonkar believes these concerns are unfounded and not particularly new.
Salgaonkar emphasized that the medium-term fundamentals for Sea’s diverse business segments—e-commerce, gaming, and fintech—remain robust. His earnings estimates for fiscal years 2026 and 2027 are approximately 3% to 5% higher than the consensus. In the e-commerce sector, he pointed out that market share consolidation is favoring the top two platforms, with Shopee being one of them.
“We find Shopee well positioned to benefit from lower competition, increasing ad yields, better commissions, and a higher proportion of in-sourcing,” Salgaonkar stated. This positioning allows the company to potentially exceed expectations in terms of revenue and margins in the coming years.
In the gaming sector, Sea has the opportunity to leverage artificial intelligence to enhance user engagement through increased customer personalization. The analyst noted that Garena’s Free Fire game is expected to maintain steady growth, bolstered by potential collaborations, such as with the popular franchise Naruto, and ongoing expansion into emerging markets.
Salgaonkar also highlighted that Sea has the potential to surprise positively in its fintech endeavors. While the company is expanding its lending offerings, it is adopting a cautious approach. “In fintech, Sea is broadening its services from on-Shopee to off-Shopee and secured loans, gradually scaling in all markets, including Brazil,” he explained.
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