Sea's businesses still grow fast, but profit is not keeping up. Management has started spending on a new venture. Insiders sold stock. The price fell through the exit line we wrote in July, and we follow our own rule. The stock is now cheap. Whether it is cheap and safe gets decided at the 2026-11-10 earnings report, not before.
| Item | Call |
|---|---|
| Score | 6.0/10 [v1: 7.5] |
| Growth thesis | INTACT |
| "Self-funded, founder-aligned" capital-allocation thesis | BROKEN |
| v1 price exit rule | FIRED. Honored. |
| Status | IMPAIRED, ON WATCH. No stock purchases before the 2026-11-10 print. |
| Tier | Conviction-spec. Moat 7/10 [v1: 7.5–8], below the 9/10 bar for full-size (Tier-1) positions. The new position is half of v1's size. |
| Checklist | 9 PASS / 3 WATCH / 4 FAIL [v1: 11 / 2 / 3] |
| Macro | YELLOW. Rates near 5% weigh on the price investors will pay. A headwind, not a veto. |
v1 said two different things about the same line. The entry-ladder section said a weekly close below $75 meant "stop adding, reassess." The breakers section said "exit, don't average." The stock closed the week of 2026-10-23 at $74.63, so the line was crossed.
PM decision: the breakers list is binding. We honor the exit. A position built under the v1 plan is exited. It is not averaged down.
| Change | Points | Reason |
|---|---|---|
| Insider gate: PASS → FAIL | −0.50 | About $344M sold from 2026-07-10 to 2026-10-23, including Li's $147.3M. Zero open-market buys. |
| Capital-allocation regime change | −0.50 | The 2026-10-20 memo announced Sea Cloud (no budget) and a possible listing of Monee, the fintech arm. |
| Profit is not keeping pace with sales | −0.50 | Net income +10.6% on revenue +48.1%. Net margin 5.9% is below the 6.5% v1 used in its bear case. |
| TikTok keeps taking share | −0.25 | Cube data: TikTok Shop went from 27% to 39% of the big-three Southeast Asian platforms in one year. |
| Founder's stake was overstated | −0.25 | Li's own economic stake is about $3.5B, not v1's $10.96B (Management tab). |
| Operating-efficiency gate: PASS → WATCH | −0.25 | Operating margin 8.35% vs 9.27% a year earlier. |
| Cheaper valuation | +0.50 | Price-to-sales 1.64x [v1: 2.70x]. Next-year price-to-earnings 14.5x [v1: 27.0x]. |
| Credit is steady | +0.25 | Late loans 1.0%. Loss reserves are growing in line with the loan book. |
| Net | −1.50 | 7.5 → 6.0 |
Sea is a Singapore company listed in New York. It started in games, used game profits to build an online mall, and used the mall's data to build a lender. In October it added a fourth idea: renting out its own computer infrastructure as an AI cloud. The 8-year-old version: a phone mall, delivery bikes, a piggy bank and a game. Now also a rented-out computer room, which makes the story less simple.
| Date | Milestone |
|---|---|
| 2009 | Founded as Garena in Singapore by Forrest Li, Gang Ye and David Chen. |
| 2014 | SeaMoney begins. Chris Feng joins from Rocket Internet/Lazada. |
| 2015 | Feng launches Shopee: mobile-first, with local teams in each country. |
| 2017 | Renamed Sea Limited. New York listing in October. Free Fire is built in-house for cheap Android phones. |
| ~2019 | Shopee overtakes Alibaba-backed Lazada as Southeast Asia's #1. |
| Oct 2021 | Stock peaks near $366 (all-time high $372.70 on 2021-10-19). |
| Jan 2022 | Tencent cuts its stake. Li consolidates control. |
| Feb 2022 | Free Fire banned in India. Still not relaunched. |
| Sept 2022 | The memo. Leadership takes $0 cash pay "until self-sufficiency." About 7,000 layoffs. Exits from France, India, Spain and Argentina. Stock about $35, −90%. |
| Q4 2022 | First profitable quarter. Self-funding since. |
| 2023–24 | TikTok Shop forces live-video shopping. Shopee builds its own. SPX passes 50% of Shopee's orders. |
| May 2025 | SeaMoney renamed Monee. |
| Sept 2025 | Stock peaks at $199.30 (2025-09-11). NEW: Li's pre-arranged selling plan adopted on 2025-09-10. v1 missed this. |
| Nov 2025 | $1B buyback announced. |
| 2026-03-03 | Q4 2025 earnings day. −16.5% on the day, then a low of $77.05 on 34.8M shares (7.2x average volume). CORRECTED: v1 called this unattributed. |
| 2026-03-18 | First insider-trade report (Form 4) under the new US reporting regime for foreign issuers. Earlier "no insider sales" findings reflect a disclosure gap, not an absence of selling UNVERIFIED: start date inferred from filings. |
| 2026-05-12 | Q1 2026. Revenue +46.6%. First quarter with adjusted EBITDA above $1B. Stock +13.1%. |
| 2026-07-10 | v1 as-of date, $111.14. |
| July 2026 NEW | MariBank Philippines gets a digital-bank licence (BigGo/DBS; not filed by Sea). |
| 2026-08-11 NEW | Q2 2026 print. Stock +14.6% to $131.51 (high $131.94). Li's sales begin the same day. |
| 2026-08-25/26 NEW | Daily "golden cross," the 50-day average crossing above the 200-day CONFLICT: sources disagree by one day. |
| 2026-09-15 NEW | $996.3M of 0.25% convertible notes mature. Repayment in cash is presumed UNVERIFIED until the Q3 filing. |
| 2026-09-16 NEW | Annual meeting. No proposals. |
| 2026-10-01/02 NEW | DBS downgrades Buy → Hold, target $148 → $105 CONFLICT on the date. |
| 2026-10-16 NEW | MSCI warns it may drop Indonesia from emerging-market indexes. Jakarta stocks −11.6% in a day. SE −3.83%. |
| 2026-10-20 NEW | Li's anniversary memo: Sea Cloud plus a possible Monee listing. SE −9.1%. |
| 2026-10-23 NEW | Weekly close $74.63. The v1 exit rule fires. |
| 2026-10-26 NEW | New 52-week low of $71.53 intraday. Close $74.01. |
A flywheel is a loop where each step makes the next one stronger. Sea's loop still turns. This quarter two leaks appeared: profits flowing out to Sea Cloud, and a possible split of the lender from the mall.
Six questions decide this stock. Two got worse this quarter: competition and capital allocation. One got better: credit quality. One was partly answered: the margin question.
We graded every claim from July. The growth calls were right. The calls about management's discipline, the entry zones and the near-term price path were wrong. Several v1 "facts" turned out to be measurement errors, and they are corrected below. "[v1: X]" means the value in the July report.
| v1 claim | Grade | Evidence |
|---|---|---|
| Shopee gross merchandise value (GMV) growth ≥25% with take rate flat or up | KEPT | GMV +28.4%. Take rate (Shopee revenue ÷ GMV) 14.59% [Q2 2025: 12.64%]. |
| Monee loans 90+ days late ≤1.5% | KEPT | 1.0%, steady vs Q1. |
| Adjusted EBITDA above $1B per quarter, sustained | MISSED | Q2: $917.2M [Q1: $1,034.3M]. |
| Shopee adjusted EBITDA ≥ the 2025 level | SUPERSEDED | Management replaced it with an explicit 2026 target of ≥$1B. |
| Buyback ≥$168M per quarter | KEPT | Q2: $416.8M (4.7M shares). |
| Q2 fund filings show stabilizing breadth | PARTIAL | 418 funds added, 305 cut. The hedge-fund holder count is not available. |
| Garena bookings growing double digits | KEPT, slowing | +20.1% → +15.5%. |
| Brazil share climbing | PENDING | No share data. Brazil is 15–16% of Monee loans (DBS). |
| v1 claim | Grade | Evidence |
|---|---|---|
| Weekly close < $75 | TRIGGERED | Week ending 2026-10-23 closed at $74.63. |
| 200-week average lost on >2x average volume | TRIGGERED | $74.63 close vs 200-week average $93.87. Week volume 57.56M = 2.79x the 20-week average. |
| Daily "death cross" with price < $85 | PENDING, imminent | About 5 sessions away (~2026-11-02). |
| Forrest Li selling stock | TRIGGERED 2026-08-11 | 1,139,734 shares, $147.3M. |
| Sales-and-marketing growth > revenue growth for 2+ quarters with GMV slowing | TRIGGERED (on the letter) | Q1: +52% vs +46.6%. Q2: +64.5% vs +48.1%. GMV growth slowed from 30.2% to 28.4%. |
| Loan-loss charges > Monee adjusted EBITDA | RULE WAS WRONG | Always true by construction (see the error list below). Replaced on the Trade Plan tab. |
| Loans 90+ days late above 2% | Not triggered | 1.0%. |
| Shopee regional share < 50%, or a take-rate cut | Not triggered | Cube: 55%. The take rate rose. |
| Free Fire ban in a top-3 market | Not triggered | No evidence of a ban. |
| Jakarta rule hitting local platforms | Not triggered | A new Indonesia country-risk shock appeared instead (Red Team tab). |
| v1 claim | Grade | Evidence |
|---|---|---|
| Bear case $52 | PENDING | Price is $74, 42% above it. |
| Base case $124 | MISSED (time path) | Its 9% net-margin input looks wrong vs 6.0% over the last four quarters. |
| Bull case $211 | NO LONGER RELEVANT | Not reachable on these inputs. |
| v1 claim | Grade | Evidence |
|---|---|---|
| No-chase line $116 | CORRECT | The 2026-08-11 jump to $131.94 fully reversed. |
| Trim 1 at $123–127 | CORRECT, HIT | 2026-08-11 high $131.94, close $131.51. The best call in v1. |
| Buy zones $95–100 / $86–91 / $78–83 | MISSED | All three filled within 23 trading days. A blended fill near $88.80 is −16.7% today. |
| Invalidation $75 | FIRED | Weekly close 2026-10-23. |
| "Valuation compresses into the Jul 14 inflation report and the Jul 28–29 Fed meeting" | MISSED | The stock rallied to $131.51 by 2026-08-11. |
| "Q2 reinvestment print repeats the March selloff" | MISSED (timing) | Earnings day was +14.6%. The punishment came on 2026-10-20 from the memo instead. |
| Promise | Grade | Evidence |
|---|---|---|
| 2026 GMV ~+25% | ON TRACK | First half +29.3%. |
| Shopee 2026 adjusted EBITDA ≥$1B, second half > first half | PENDING | Needs ≥$521.4M in the second half. |
| Garena double-digit bookings growth | KEPT year to date | No full-year guide repeated on the Q2 call. |
| $1B buyback | ON PACE | About $401M left. |
| Free Fire India relaunch | BROKEN | Still not relaunched. |
| Q2 earnings "~mid-August" | KEPT | 2026-08-11. |
Growth: no. How growth turns into profit, and how cash gets spent: yes.
The framework's 16 yes/no tests. Two moved the wrong way this quarter: insider buying and selling, and operating efficiency. None moved up. Several passes have new caveats. Each card shows the July grade and today's grade.
Tally: 9 PASS / 3 WATCH / 4 FAIL [v1: 11 / 2 / 3]. Moved down: gate 7 (insiders, PASS → FAIL) and gate 16 (efficiency, PASS → WATCH). Nothing moved up.
Sales are compounding fast with no acquisitions. Cash from operations is strong. But profit grew far slower than sales this quarter, the tax bill jumped, and once you count new loans, the cash left over went negative. Both are true: the mall and the games make lots of cash, and the lender is absorbing it.
All figures in $ millions. Segment columns are service revenue. "Other + goods" = other services plus goods Sea sells itself. Earnings per share = GAAP diluted, vs Wall Street's estimate. Sources: Sea quarterly filings (6-K), stockanalysis, Yahoo Finance.
| Quarter | Revenue | Shopee | Monee | Garena | Other + goods | Gross margin % | Operating margin % | Net income | Earnings per share, actual / estimate | Operating cash flow | Basic shares (M) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3'24 | 4,328.2 | 2,767.2 | 615.7 | 497.8 | 447.5 | 43.0 | 4.7 | 153.3 | 0.24/0.59 | 1,170.1 | 578 |
| Q4'24 | 4,950.4 | 3,192.5 | 733.3 | 519.1 | 505.5 | 44.6 | 6.2 | 237.3 | 0.39/n-a | 1,021.0 | 580 |
| Q1'25 | 4,841.1 | 3,118.9 | 787.1 | 495.6 | 439.5 | 46.2 | 9.4 | 403.1 | 0.65/0.93 | 756.9 | 590 |
| Q2'25 | 5,259.5 | 3,312.2 | 882.8 | 559.1 | 505.4 | 45.8 | 9.3 | 414.2 | 0.65/1.03 | 1,615.7 | 592 |
| Q3'25 | 5,986.0 | 3,778.7 | 989.9 | 653.0 | 564.5 | 43.4 | 8.0 | 375.0 | 0.59/1.11 | 1,175.4 | 598 |
| Q4'25 | 6,851.9 | 4,336.1 | 1,131.9 | 701.0 | 682.9 | 43.8 | 8.3 | 397.1 | 0.63/0.91 | 1,476.4 | 602 |
| Q1'26 | 7,097.5 | 4,503.1 | 1,241.8 | 696.6 | 656.0 | 44.3 | 8.4 | 427.9 | 0.67/0.746 | 1,057.9 | 612 |
| Q2'26 | 7,787.8 | 4,931.9 | 1,402.8 | 746.6 | 706.5 | 45.6 | 8.35 | 458.1 | 0.70 GAAP / 0.86 est (adjusted actual 0.84) | 1,506.0 | 611.5* |
Net income $458.1M vs operating cash flow $1,506.0M. The gap is $1,047.9M:
| Measure | Q2 2026 | Note |
|---|---|---|
| Operating cash flow | $1,506.0M | First half $2,563.9M − Q1 $1,057.9M |
| Capex (spending on buildings and equipment) | $356M | Q1 $139M; 2.6x jump; not explained; last four quarters $792.8M |
| Free cash flow (operating cash flow − capex) | $1,150M | 14.8% of revenue; last four quarters $4,423M [v1: $4.67B] |
| New loans made (net) | ≈$1,794M | First half $2,855M − Q1 $1,061M |
| Bank-adjusted free cash flow (free cash flow − new loans) | ≈ −$644M | [Q1: −$142M]; first half ≈ −$786M |
| Item | Now | v1 |
|---|---|---|
| Price | $74.01 (close 2026-10-26) | $111.14 |
| Shares | 612,484,522 (566,956,729 Class A + 45,527,793 Class B) as of 2026-03-31 (20-F, the latest primary count). About 608M after the Q2 buyback UNVERIFIED estimate. Diluted ≈634.5M. | 612.48M / 636.2M diluted |
| Market cap (price × shares) | $45.33B (612.48M × $74.01). Matches Yahoo Finance. No split or share sale found. | $68.07B |
| Cash and investments | $9.10B cash and short-term; $11.86B including long-term investments | $12.71B |
| Debt | $4.13B including leases; $2.22B excluding leases | $1.96B excluding leases |
| Enterprise value (market cap + debt − cash) | $40.36B (debt including leases, minus cash and short-term investments). $35.70B on a narrower definition (debt excluding leases, minus all investments). | ≈$56B |
| Short interest (shares sold short) | 10.24M = 3.12% of shares, about 2026-09-30. Prior month 10.94M. Days to cover 2.9. | 18.41M / 5.62% |
Data note: Yahoo Finance's 566.96M "shares outstanding" counts Class A only, so it is wrong. Media market caps built on it (for example, the Motley Fool's $41.96B) are understated.
The founders are still in charge and still very rich in Sea stock. But v1 overstated how much stock Li personally owns. Insiders sold heavily this summer. And the October memo opened two new uses of capital without numbers. Management is still strong; we just trust it a notch less.
Class B shares carry 15 votes each (20-F, answered). Li holds 57.6% of the votes on about 7.8% of the economic ownership (super-voting control).
| Insider | Role | Shares sold | Value | Average price / dates |
|---|---|---|---|---|
| Forrest Li | Founder, CEO | 1,139,734 | $147.3M | $129.28, 2026-08-11 to 08-28 |
| Gang Ye | COO | 1,121,208 | $126.1M | $112.45, 2026-07-08 to 09-18 |
| Chen Jingye | Chief product officer, Shopee | 300,000 | $31.5M | 2026-09-09 to 09-22 |
| Wang Yanjun | General counsel | 96,820 | $10.5M | — |
| Chris Feng | President | 91,709 | $11.4M | August |
| Tony Hou | CFO | 65,000 | $7.0M | — |
| Zhao Feng | — | 56,420 | $5.8M | — |
| Heng / Kuok | Directors | — | $2.4M / $2.0M | — |
| Trait | Score | Evidence |
|---|---|---|
| Capital allocation | 8.5 → 7.0 | Sea Cloud opened with no budget. The Monee listing was floated with no structure. The capex jump is unexplained. Credit: a $416.8M buyback in Q2 and no stock or debt sales. |
| Ethics / governance | 6.5 → 6.0 | A Monee carve-out would be decided under 15-vote shares. The Ye private-jet allegation is still unchecked. |
| Long-term orientation | 9.5 → 9.5 | Sea Cloud is a long-term bet, for better or worse. |
| Operations | 8.5 → 8.5 | Unchanged. |
| Structure / talent | 7 → 7 | Unchanged. |
| Iteration tempo | 9 → 9 | Unchanged. |
We track what management promised and whether it delivered. Q2 kept every explicit guide. The miss was in what management did not say: no budget for Sea Cloud and no Monee structure. The 2026-11-10 print has a clear pass/fail bar, below.
| Promise | Status | Evidence |
|---|---|---|
| "$0 cash pay until self-sufficiency" (Sept 2022) | KEPT originally | Current status unclear: the 20-F shows $3.13M group cash pay in 2025. |
| Profitability sustained | KEPT | 9 straight GAAP-profitable quarters, including Q2 2026. |
| 2025 profit trajectory | KEPT | 2025 net income $1.6B vs $447.8M in 2024. |
| 2026 Shopee gross merchandise value (GMV) ~+25% | ON TRACK | First half +29.3% ($75.6B vs ≈$58.5B). Repeated on 2026-08-11 with a currency warning and tougher second-half comparisons. |
| 2026 Shopee adjusted EBITDA ≥$1B, second half > first half (replaced v1's "≥ 2025 dollars") | PENDING | First half $478.6M (223.2 + 255.4). The second half needs ≥$521.4M, about $261M per quarter. |
| 2026 Garena double-digit bookings growth | KEPT year to date | +20.1%, +15.5%. Not repeated on the Q2 call. |
| $1B buyback | ON PACE | Q4 2025 $14.0M + Q1 $168.4M + Q2 $416.8M = $599.2M used; ≈$400.8M left (derived; the tracker review's ≈$415M missed the Q4 2025 purchase). No expiry date found. |
| Convertible notes | PRESUMED REPAID | At the 2026-09-15 maturity. Confirm in Q3. |
| Free Fire India relaunch | BROKEN | No relaunch. |
| Q2 earnings "~mid-August" | KEPT | 2026-08-11. |
| Like-for-like adjusted earnings per share vs estimate | 2 BEATS / 6 MISSES | Q1 2026 beat ($0.81 vs $0.77). Q2 2026 miss ($0.84 vs $0.86). Over 8 quarters. |
| Revenue vs estimate | BEAT | Q2 beat consensus. Not separately quantified in this refresh. |
Every explicit target held, and revenue and GMV beat. But profit growth was a fifth of sales growth, and nothing was disclosed on Sea Cloud or Monee. The market waited two months, then punished the memo. Sea gives no formal quarterly guidance, only qualitative annual guides. That is part of why the stock whipsaws on prints.
Wall Street expects revenue of $8.07B (+34.9%; range $7.69–8.32B) and adjusted earnings per share of $0.97 (5 analysts, Yahoo Finance). The tracker and red-team reviews proposed slightly different bars. This table merges them, using the stricter fail line where they differ.
| Metric (Q3 2025 base) | PASS | WATCH | FAIL |
|---|---|---|---|
| Shopee GMV ($32.2B) | ≥$39.9B (+24%) | +22–24% | <$39.3B (below +22%) |
| Shopee adjusted EBITDA | ≥$261M (on pace for $1B) | $240–261M | <$240M, or the $1B target withdrawn |
| Take rate | ≥14.3% | — | Cut of more than 30 basis points vs Q2 |
| Value-added-services revenue | Back to growth | — | A second straight decline and Shopee sales and marketing above 3.3% of GMV (a subsidy war) |
| Monee loans 90+ days late | ≤1.2% | 1.2–1.5% | >1.5% |
| Monee annualized loan-loss charge | ≤26% of average on-book loans | — | >26% |
| Reserve growth ÷ on-book loan growth | ≤1.5x | — | >1.5x |
| Monee adjusted EBITDA | ≥$288M | — | Down vs Q2 |
| Garena bookings ($840.7M) | ≥$925M (+10%) | — | <$841M (down vs a year ago) |
| Group sales-and-marketing growth vs revenue growth | Slower than revenue (resets the breaker) | — | Faster than revenue for a third straight quarter |
| Group GAAP net income | ≥$431M (+15%) | — | Net-income growth below one-third of revenue growth for a third straight quarter |
| Sea Cloud / capex | Spending quantified; capex below 30% of operating cash flow | — | 2027 capex guide above $1.5B with no outside revenue or contracts disclosed, Q3 capex above $500M, or open-ended spending |
| Monee listing | Structure disclosed; Sea keeps control | — | Sea sells more than 25%, or loses control |
| Capital return | Q3 buyback ≥$200M, plus a new authorization of $1B or more | — | Program lapses with no replacement |
The October drop was not short sellers. It was long holders leaving after the memo, plus Indonesia's market crash and higher US rates. Wall Street analysts are still overwhelmingly bullish, so the framework's contrarian "everyone hates it" signal is only half there.
| Window | SE move | Driver | Evidence |
|---|---|---|---|
| 2026-08-11 → 10-01 | $131.51 → $95.27 (−27.6%) | Post-print fade, insider selling under pre-arranged plans, emerging-market and peer de-rating, rates | GRAB −27.5% and CPNG −16.7% since 2026-08-11. US 10-year yield 4.57% (07-10) → 5.29% (09-30). Insiders sold $231.5M in August and $64.0M in September. |
| DBS downgrade: Buy → Hold, target $148 → $105 (downside case $71) | About −0.1% to −2.1% on the day | DBS says quick-commerce spending cuts Shopee's 2026 adjusted EBITDA 15–20%, and cites PDD's cross-border push from 2027 | CONFLICT on the date 2026-10-01 per itiger (−2.1% to $95.27); 2026-10-02 per ad-hoc-news and the price data (−0.08%, $95.27 → $95.19). The stock then rose +2.4% to 10-15. The price impact was immaterial either way. |
| MSCI Indonesia warning, 2026-10-16 | 10-16: −3.83%. 10-19: −5.65% ($88.47) | Indonesia country risk | Indonesia fund (EIDO) −14.9% on 10-16 and −3.3% on 10-19. CONFLICT on 10-19 the tracker review found no catalyst; the red team points to Indonesia; the technical review cites a Dow Jones Market Talk on Shopee currency headwinds plus a Seeking Alpha "insider selling" headline. |
| Li's memo, 2026-10-20 | −9.1% to $80.43 (Yahoo Finance; StockStory says −9.4% to $80.17) on 18.9M shares (4.1–4.4x the 50-day average, depending on the window). 10-21: −3.10% on 15.55M. | The main driver, and specific to Sea | EIDO +7.2% and QQQ −0.1% that day, so it was not the market. Tickeron blamed DBS; that is wrong, because the DBS note was weeks earlier. |
| 2026-10-22 → 10-26 | $77.94 → $74.01 (−5.0%) | Follow-through. Dow Jones: Sea Cloud "could weigh on profit," with break-even in 3–4 years (headlines only). | CoreWeave −10.1% and QQQ −2.9% on 10-22. |
| October insider sales | — | $6.1M total | Negligible as an October cause. |
18.41M → 10.24M shares (−44%), 3.12% of shares, about 2026-09-30. Days to cover 2.9.
The framework buys "unanimous despair with an executing roadmap."
A moat is what stops competitors from taking your customers. Shopee's moat is real: its own delivery network, its scale and its lending data. But TikTok Shop keeps crossing it. Shopee is still the bigger and more profitable player, just by less each quarter. Further down this tab: at $74 you pay about $1.64 for every $1 of Sea's yearly sales, the lowest-but-one in the peer group, and the re-run base case is $109.
| Market | Shopee | TikTok Shop (incl. Tokopedia) | Source / period |
|---|---|---|---|
| Southeast Asia, big three | 55% [61% a year earlier] | 39% [27%] | Cube, first half 2026 vs first half 2025 |
| Southeast Asia, GMV (gross merchandise value) ratio | — | TikTok + Tokopedia GMV = 65.7% of Shopee's | Momentum Works, 2025 |
| Vietnam | 53% [61%] | 44% [33%] | Q&Me, May 2025 to April 2026 (secondary summary) |
| Indonesia | 54% | 38% | 2025 (not refreshed for 2026) |
| Thailand | ~52% | 48% of combined | Cube, Q2 2026 |
TikTok Shop's first-half 2026 GMV was $34.7B, +80% (Momentum Works). Shopee's Indonesia GMV grew +19% and Vietnam +10% (Cube).
TikTok took about 12 points of combined share in one year. Thailand is near a flip.
| Ticker | Price | Market cap | Price / sales | Enterprise value / sales | Forward price / earnings | Revenue growth | Operating margin | Off 52-week high | v1 values |
|---|---|---|---|---|---|---|---|---|---|
| MELI | $1,668.72 | $84.6B | 2.40 | 2.62 | 29.7 | +49.8% | 6.7% | −31% | Forward P/E 46.1, P/S 2.95 |
| CPNG | $13.75 | $24.7B | 0.70 | 0.68 | 49.6 | +3.9% UNVERIFIED, looks wrong | −6.3% | −57.5% | P/S 0.96 |
| GRAB | $2.71 | $11.1B | 2.97 | 1.87 | 20.5 | +21.9% | 2.1% | −56.6% | Forward P/E 41.9, P/S 4.53 |
| SE | $74.01 | $45.3B | 1.64 | 1.46 | 14.5 (next 12 months) | +48.1% | 8.35% | −54.9% | P/S 2.70 |
At $74 you pay about $1.64 for every $1 of Sea's yearly sales, and about 14.5 times next year's expected profit. The earnings multiple is the lowest in Sea's peer group, and the sales multiple the second-lowest. Our re-run base case is $109, but it assumes profit margins recover only modestly.
| Lens | How it works (worked example) | SE now | v1 |
|---|---|---|---|
| Price / sales (last four quarters) | Market cap $45.33B ÷ revenue $27,723M | 1.64x | 2.70x |
| Forward price / sales | $45.33B ÷ 2026 estimate $31.19B / 2027 estimate $38.33B | 1.45x / 1.18x | — |
| Enterprise value / sales | $40.36B ÷ $27,723M (or $35.70B on the narrower definition = 1.29x) | 1.46x | 2.43x |
| Price / free cash flow | $45.33B ÷ $4,423M (stockanalysis: 10.78x) | 10.2x | 14.6x |
| Enterprise value / EBITDA | On GAAP EBITDA ≈$2.68B: 15.0x. On adjusted EBITDA over the last four quarters, $3,612.9M (874.3 + 787.1 + 1,034.3 + 917.2): 11.2x | 11.2–15.0x | — |
| Trailing price-to-earnings | $74.01 ÷ GAAP diluted earnings per share over the last four quarters, $2.59 (0.59 + 0.63 + 0.67 + 0.70) | 28.6x | 43.8x |
| Forward price-to-earnings | $74.01 ÷ 2026 adjusted estimate $3.92 / 2027 estimate $5.10 | 18.9x / 14.5x | 27.0x |
| PEG (price-to-earnings ÷ growth rate) | Yahoo Finance | 0.73 | 1.43 |
DBS values Monee alone at $18–22B (12–15x its estimated 2027 adjusted EBITDA of about $1.5B). The share price implies about $6B for Monee (BigGo, 2026-10-21) UNVERIFIED secondary source.
| Gauge | Reading |
|---|---|
| Fed funds rate (the Fed's policy rate) | 3.75–4.00%. A hold is about 90% likely at the 2026-10-28 meeting. December has about 71% odds of a hike (CNBC/FedWatch, 2026-10-23). |
| 10-year Treasury yield | 4.96% (2026-10-22), about 5.00% at the 2026-10-23 close. 2-year 4.65%. Inflation-adjusted 10-year 2.64%. |
| Prices | Headline inflation (CPI, the consumer price index) 3.7%. Brent oil about $114. |
| Growth | Purchasing-manager surveys (ISM, above 50 = expanding): manufacturing 54.5, services 54.9. Atlanta Fed real-time GDP estimate (GDPNow): +3.5%. Last monthly jobs gain: +29K. |
| Stock fear gauge (VIX) | 19.10 [2026-10-23: 20.15] |
| Credit | Junk-bond spread over Treasuries: 3.40%, +60 basis points in 20 days. Lowest-rated (CCC) bond yield: 13.40%, +228 basis points. Investment-grade spread: 0.89%. |
| Liquidity | Contracting: tightening signals outnumber easing ones 6 to 2. |
| Framework rules | "Never initiate unprofitable small caps late in a liquidity cycle" does not apply: SE is a $45B GAAP-profitable large company. The Stage-9 late-cycle test ("only names that completed a 60–85% correction") is met on depth: −64.1% from $199.30 to $71.53. It is not met on structure: the chart has made no higher low. |
A KPI (key performance indicator) is a number tracked to judge progress. These eight are the ones that tell you whether the business engine is healthy. All are checked at the 2026-11-10 print.
| KPI | v1 value | Now | Healthy reading | Check by |
|---|---|---|---|---|
| 1. Delivery cost per order (SPX), vs a year ago | −6% Asia / −21% Brazil | Instant delivery about −20% (different basis; from the Q2 call summary) | Still falling | 2026-11-10 |
| 2. Take rate and share, together | 13.7% / 53–59% | 14.59% / 55% (Cube) | Take rate flat or up while share holds at 50% or more | 2026-11-10 |
| 3. Reserve growth ÷ on-book loan growth | 2.7x (Q1) | 0.98x (improved) | Below 1.5x | 2026-11-10 |
| 4. Bank-adjusted free cash flow (operating cash flow − capex − new loans) | −$142M (Q1) | −$644M (worse) | Back toward zero as loan growth slows | 2026-11-10 |
| 5. Garena deferred-revenue build (bookings minus recognized revenue) | +$254.8M (Q1) | +$16.9M (drained) | Positive and rising; it is the gaming engine's fuel gauge | 2026-11-10 |
| 6. Stock-based pay in dollars | $133.3M | $131.9M (6th straight decline) | Keeps falling | 2026-11-10 |
| 7. NEW: Shopee adjusted EBITDA ÷ GMV | — | 0.67% (Q1 0.60%; Q2 2025 0.76%) | Rising toward Li's 2–3% | 2026-11-10 |
| 8. NEW: net-income growth ÷ revenue growth | — | 0.22 (10.6% ÷ 48.1%) | 0.33 or more | 2026-11-10 |
The red team's job is to argue the bear case as hard as possible. Its verdict: the bear case got stronger on the facts, because profit is lagging and spending is rising. But the price already reflects much of it. The re-run bear is 26–38% below today, vs 53% below in July.
v1 did not publish the framework's 10 priced downside scenarios. Below, v1's 9 ranked risks plus its bear case are mapped to scenarios 1–10, with five new ones added.
Bars show each scenario's implied price; the dashed line is today's close. Ranges are drawn at their midpoint. Scenario 15 folds into #1 and has no separate price.
| # | Scenario | Grade vs v1 | Dated evidence | Implied price |
|---|---|---|---|---|
| 1 | TikTok Shop takes share for good | WORSE | Cube (2026-10-13): Shopee 61% → 55%, TikTok 27% → 39%. Thailand TikTok 48%. Vietnam Shopee 53% / TikTok 44%. Offset: take rate +195 basis points. | $34B revenue × 5% ÷ 634.5M = $2.68 × 16x ≈ $43 |
| 2 | Monee credit cycle | WORSE (mild) | Annualized loss charge 21.7% → 23.6%. Charges = 39.5% of revenue. Mix shift to Brazil and off-Shopee loans. Monee marketing +139.8%. Rupiah near its record low. Offsets: 1.0% late loans, reserves keeping pace (0.98x), book growth slowing. | Monee profit (~$1.15B run rate) wiped out ≈ −$0.9B after tax → $1.35B → $2.13 × 15–18x ≈ $32–38 |
| 3 | A reinvestment print repeats the March selloff | HAPPENED (differently) | Earnings day was +14.6%. The punishment came 2026-10-20 from the memo. Adjusted EBITDA growth +9.3% / +10.6% vs revenue +46.6% / +48.1%. | $3.62 × 18x ≈ $65 |
| 4 | Valuation multiple shrinks (macro) | HAPPENED | Price-to-sales 2.70 → 1.64. Forward price-to-earnings 27.0 → 14.5. 10-year yield 4.57% → 4.99% (peak 5.29% on 09-30). Cause mostly emerging-market and Sea-specific: QQQ −1.7%. | $3.62 × 15x ≈ $54 |
| 5 | Currency translation | WORSE | Q3 average vs a year earlier: the dollar up 9.1% vs the rupiah, 8.6% vs the peso, 6.9% vs the Taiwan dollar, 3.0% vs the baht. The Brazilian real is 5.7% stronger. Indonesia is ≈40% of Shopee's Southeast Asian GMV. | Revenue −6%, net income −8% → $3.33 × 20x ≈ $67 |
| 6 | Free Fire concentration | UNCHANGED | Bookings growth 20.1% → 15.5%. Users flat. Deferred-revenue build collapsed to $16.9M. The 20-F says Free Fire is a "significant majority" of Garena. New titles announced, not launched. | Garena profit −40% (≈ −$0.52B after tax) → $2.73 × 18x ≈ $49 |
| 7 | Indonesia regulation | WORSE (country risk, not rules) | MSCI downgrade warning 2026-10-16. Jakarta index ≈ −40% for the year. KPPU logistics complaint vs Tokopedia (filed 2026-04-15, pending). Tokopedia deal monitoring runs to 2027-06-17. No new anti-Shopee rule. | Net income −20% → $2.90 × 17x ≈ $49 |
| 8 | Governance | WORSE | Li sold $147.3M. A Monee carve-out dilutes outside holders' share of the fastest-growing segment, decided under 15-vote shares. | 15% conglomerate discount ≈ $63 |
| 9 | Analysts all bullish, so only downgrades are left | PARTLY HAPPENED | DBS to Hold. Low target now $70 [v1: $101]. 2027 earnings estimate −2.9%. Spot 51% below the average target. | Estimate cut −20% to $4.08 × 14.5x ≈ $59 |
| 10 | v1 bear valuation ($52) | Revenue leg FALSIFIED, margin leg CONFIRMED | v1 bear 2027 revenue $29.5B vs trailing $27.7B already. v1 bear margin 6.5% vs actual 5.9% (Q2) and 6.0% (trailing). | Mechanical re-run: $3.03 × 18x = $54.5. Updated: $35.6B × 5.5% ÷ 634.5M = $3.09 × 16x = $49 |
| 11 | NEW: Sea Cloud capex cycle | NEW, medium | Q2 capex $356M (2.6x Q1), no budget. The AI-cloud comparable CoreWeave is −37.9% since 2026-07-10. | Capex rises to ~$2.5B a year plus ~$0.3B of cloud losses ≈ −$0.53B net income → $2.71 × 18x ≈ $49. Free cash flow before loans falls from $4.42B to about $2.7B. |
| 12 | NEW: Monee listed at a low fintech valuation | NEW, low-medium | Nubank −16.95% on 2026-10-26 (cause UNVERIFIED), about −30% for the year (secondary). The memo says "could." | Floating 20%: about $0.84B of Monee after-tax profit × 20% = $0.17B a year = $0.26 per share × 20x ≈ −$5 → $69. The bigger risk is losing the Shopee-Monee data and funding link (flywheel step 4). |
| 13 | NEW: Indonesia capital flight / rupiah crisis | NEW, medium-low | The rupiah moves from 18,081 to 20,000+ and spreads into consumer credit. Indonesia is SeaBank's home market. | Scenarios 2 + 5 + part of 7 ≈ $45–50 |
| 14 | NEW: confusing Q3 print | NEW, medium | Garena's adjusted EBITDA definition changes. Q2 group adjusted EBITDA already fell 11.3% vs Q1. | A −10% to −15% drop on a misread → $63–67, temporary |
| 15 | NEW: Thailand flips to TikTok | NEW (folds into #1) | TikTok at 48% of combined Q2 GMV (Cube). | Watch for a country-level take-rate cut. |
Spread: of 15 scenarios, 5 price at $49 or less. The median implied price is about $54–59.
Honor the breaker. No stock adds before 2026-11-10. Re-entry depends on the Sea Cloud capex number, not on chart levels.
See the "v1 errors corrected" list on the What Changed tab. Two further audit items:
The chart is broken. Price fell below every major average and a key multi-year average, on heavy volume. It is also very oversold and sitting on a historically busy price area. That could be a bottom, but nothing confirms it yet. So: no stock buys until after 2026-11-10. Before the print, the only tool is selling cash-secured puts at lower prices. The position size is half of v1's.
| v1 breaker | Status | Evidence (dated) |
|---|---|---|
| Weekly close < $75 | FIRED | Week ending Fri 2026-10-23 closed $74.63. Follow-through 10/26: close $74.01, intraday low $71.53 (new 52-week low). |
| Loss of the 200-week average on >2x average weekly volume | FIRED | The 200-week average was $93.87 on 10/23 (now $93.98; v1 said ~$90.09; it has risen as 2022 lows roll off). Weekly close $74.63 is 20.5% below it. Week volume 57.56M = 2.79x the 20-week average (20.62M) and 2.73x the 10-week. First daily close below it: 10/19 at $88.47. |
| Daily death cross with price < $85 | NOT YET · ~5 trading days out | 50-day 102.48 vs 200-day 99.69, a 2.79 gap, shrinking ~0.65–0.77/day (6.48 → 2.79 over 8 sessions). Projection: the cross lands on trading day +5 (≈2026-11-02) at flat $74, at −0.5%/day, and even at +1%/day (≈$78). It will very likely fire before the 11/10 print. The last cross was a golden cross on 2026-08-26; the prior death cross was 2025-12-11. |
The v1 exit rule fires: 2 of 3 conditions are met and the third is near-certain within days. As written, "exit, don't average" applies now.
Was the rule wrong? It worked as written. The design had three flaws:
Bottom line: honor the rule. No adds at market and no averaging down in stock before 2026-11-10. Re-entry is conditional.
Capitulation or broken? Broken chart, capitulation not confirmed. Framework Stage 9 "late-bull" test: the depth is met (−64%), but "wave count done" is not. Classification: ACCUMULATE ONLY VIA PUTS OR AFTER THE PRINT; DO NOT BUY STOCK AT MARKET.
| Level | v1 (7/10) | Now (10/26) | Status |
|---|---|---|---|
| Full advance $55.00 (2024-08-05) → $199.30 (2025-09-11): 0.618 | 110.12 | 110.12 (same swing) | Was support in v1; now overhead resistance |
| Same: 0.786 | 85.88 | 85.88 | Broken 10/20 (gapped down through it) |
| Same: 0.886 | not cited | 71.45 | Being tested (low $71.53) |
| Same: 1.0 | 55.00 | 55.00 | Next major support |
| Secular $34.35 (2024-01-17) → $199.30: 0.786 | n/a | 69.65 | New support |
| 200-week average | 90.09 | 93.98 (rising ~0.1/week) | Moved +$3.89; lost on 10/19 daily and the 10/23 weekly |
| New recovery swing $77.05 (2026-03-03) → $131.94 (2026-08-11): 0.5 / 0.618 / 0.786 / 1.0 | n/a | 104.50 / 98.02 / 88.80 / 77.05 | All broken |
| Recovery swing extensions 1.272 / 1.618 | n/a | 62.12 / 43.13 | 1.272 is the next measured target |
| Decline $131.94 → $71.53 retraces 0.236 / 0.382 / 0.5 / 0.618 / 0.786 | n/a | 85.79 / 94.61 / 101.73 / 108.86 / 119.01 | New trim grid |
| Decline $199.30 → $71.53 retraces 0.236 / 0.382 / 0.5 / 0.618 | (v1 used 0.382 recovery 123.75 etc.) | 101.68 / 120.34 / 135.42 / 150.49 | v1's recovery grid is invalidated because the swing extended down |
| v1 call | Grade | Detail |
|---|---|---|
| No-chase $116 | CORRECT | The 8/11 gap reached $131.94 and fully round-tripped. Anyone who chased $116–131 is now down 36–44%. |
| Trim 1 $123–127 | CORRECT, HIT | 8/11 high 131.94, close 131.51, 8/12 high 131.90. The best call in v1. |
| Trim 2 $138–145, Trim 3 $152–155, Runner $170–175 | RETIRE | Never reached. The swing math is invalidated. |
| Zone 1 $95–100 (30%) | FILLED · RETIRE | Late Sep/early Oct (lows: 9/18 99.54, 9/25 99.25, 10/1 93.70). Now −22 to −26%. Now overhead resistance: 200-week 93.98, high-volume node 95–97.5. (PM note: the tracker review dated the first Zone-1 fill to 2026-07-23, low $99.30; different touch thresholds. Immaterial.) |
| Zone 2 $86–91 (40%) | FILLED · RETIRE | 10/19 (low 87.88), gapped through on 10/20 (open 85.52). Now −14 to −19%. The 200-week/0.786 overlap failed on volume. |
| Zone 3 $78–83 (30%) | FILLED · RETIRE | 10/20–10/21 (lows 79.89 / 75.99). Now −5 to −11%. |
| Hard invalidation $75 | FIRED | Weekly close 2026-10-23. |
The current tranche is about 50% of v1's tranche size: the exit rule fired and the moat is still below 9, so this stays a conviction-spec position. No stock buys before the 2026-11-10 print (Yahoo Finance date, pre-market US per Sea's pattern; confirm with investor relations). Zones A–C are stock buy zones only after the print. Before the print, accumulate only through cash-secured puts at Zone B/C strikes. A Zone A put is allowed only if it expires before the print (11/6).
Price-to-sales uses last-four-quarters revenue of $27.72B and 612.5M shares.
The print passes the Management-tab bar and the stock reclaims and holds a daily close above $86.43–87.88 (gap fill + 0.236 of the decline at 85.79 + the old 0.786 at 85.88). Buy only on the first pullback to $78–82, and at most 25% of the tranche there. No-chase line: $88. Above it, do not start buying: the next resistance cluster is $93–95 (200-week, 0.382 of the decline, gap, node), so reward-to-risk vs Zone A is poor.
The print fails and price breaks $69 on a weekly close. Skip Zone A and let Zone B/C fill only through puts. (PM note: a "fail" print that also triggers a business breaker overrides the Zone B/C put plan. In that case, stop selling puts.)
| Trigger | Action | Why |
|---|---|---|
| $85–88 | T1: sell 20–25% of the trade tranche | 0.236 of the decline 85.79, old 0.786 85.88, gap 86.43–87.88, 87.5–90 node |
| $93–95 | T2: sell 25% | 200-week 93.98, 0.382 of the decline 94.61, gap 93.09–93.49, 92.5–97.5 node |
| $100–104 | T3: sell 25% | Daily 200-day / 50-day averages (99.7 / 102.5 today, both falling), 0.5 of the decline 101.73, 0.236 of 199 → 71 at 101.68 |
| $108–111 | Runner | 0.618 of the decline 108.86, 0.618 of the advance 110.12, 0.382 of the recovery 110.97. Keep a core above that only if the print shows reacceleration |
| Price-to-sales ≥ 4.0 (≈$181 on current revenue) | Trim regardless of chart (kept from v1) | Valuation rule. Irrelevant this cycle |
Caveat on the blended v1 cost: for a holder at the v1 blend (~$88.8), T1 and T2 are at or below cost. T2 is the first band that gets back to breakeven.
| Print date | Earnings-day move |
|---|---|
| 2024-11-12 | +10.5% |
| 2025-03-04 | +7.1% |
| 2025-05-13 | +8.2% |
| 2025-08-12 | +19.1% |
| 2025-11-11 | −8.2% |
| 2026-03-03 | −16.5% |
| 2026-05-12 | +13.1% |
| 2026-08-11 | +14.6% |
Mid price; yield = mid ÷ strike; assigned basis = strike − mid; annualized = yield scaled to a year.
| Zone | Contract | Mid (bid/ask) | Delta | Yield / days | Annualized | Assigned basis | Note |
|---|---|---|---|---|---|---|---|
| A | Nov-06 70P | 1.145 (1.01/1.28) | −0.26 | 1.6% / 10d | 60% | $68.86 | Expires before the 11/10 print. The only Zone-A put that respects the gate. |
| A | Nov-27 70P | 3.925 (3.60/4.25) | −0.35 | 5.6% / 31d | 66% | $66.08 | Spans the print; would place a Zone-A strike across the event. |
| A | Dec-18 70P | 4.90 (4.65/5.15) | −0.36 | 7.0% / 52d | 49% | $65.10 | Spans the print; would place a Zone-A strike across the event. |
| B | Dec-18 65P | 2.995 (2.84/3.15) | −0.25 | 4.6% / 52d | 32% | $62.01 | Preferred. Tight market, basis at the 1.272 extension. |
| B | Nov-27 65P | 2.35 (1.86/2.84) | −0.22 | 3.6% / 31d | 43% | $62.65 | Wide market. |
| B | Jan-15 65P | 4.00 (3.75/4.25) | −0.27 | 6.2% / 80d | 28% | $61.00 | — |
| C | Dec-18 60P | 1.715 (1.51/1.92) | −0.16 | 2.9% / 52d | 20% | $58.29 | — |
| C | Jan-15 60P | 2.495 (2.30/2.69) | −0.19 | 4.2% / 80d | 19% | $57.51 | — |
| C | Dec-18 55P | 0.91 (0.80/1.02) | −0.09 | 1.65% / 52d | 11.6% | $54.09 | — |
| C | Jan-15 55P | 1.35 (1.05/1.65) | −0.12 | 2.5% / 80d | 11.2% | $53.65 | — |
| Band | Contract | Mid (bid/ask) | Delta | Yield / days | Annualized |
|---|---|---|---|---|---|
| T1 | Dec-18 85C | 3.425 (3.05/3.80) | 0.33 | 4.6% / 52d | 32% |
| T1 | Dec-18 87.5C | 2.775 (2.57/2.98) | 0.29 | 3.7% | 26% |
| T1 | Jan-15 85C | 4.475 (4.25/4.70) | 0.37 | 6.0% / 80d | 28% |
| T1 | Jan-15 87.5C | 3.825 (3.60/4.05) | — | — | 24% |
| T2 | Dec-18 92.5C | 1.895 | 0.22 | 2.6% | 18% |
| T2 | Dec-18 95C | 1.51 (1.23/1.79) | 0.18 | 2.0% | 14% |
| T2 | Jan-15 95C | 2.39 (2.17/2.61) | 0.23 | 3.2% | 15% |
| T3 | Dec-18 100C | 1.05 (0.76/1.34) | 0.13 | — | 10% |
| T3 | Jan-15 100C | 1.745 (1.57/1.92) | 0.18 | — | 11% |
| Runner | Jan-15 110C | 0.92 (0.74/1.10) | 0.10 | — | 5.7% |
Sell the v1-plan shares. Before the print, the preferred trade is the December $65 put. It pays about $3 per share and buys at about $62 if assigned, which is 1.37x sales. The pre-print $70 put is acceptable only in the Nov-06 expiry. After 2026-11-10, buy stock only if the print passes and price reclaims about $87. Even then, buy only on a pullback to $78–82, and never above $88. A weekly close under $55 stops all buying until the case is rebuilt.
This is the checklist for the next quarter. Each line says what to watch, what counts as good or bad, what to do, and when we will know. v1 broke rules partly because some rules were badly specified. Those are rewritten here.
| # | Risk | What it is · check by |
|---|---|---|
| 1 | TikTok Shop takes share for good (was #1) | Share fell to 55% and Thailand is near a flip. Kill signal unchanged: regional share below 50%, or a take-rate cut. Check: 2026-11-10 (take rate). The next Cube or Momentum Works share report is undated. |
| 2 | NEW: capital allocation (Sea Cloud, Monee listing) | Spending with no budget, and a possible carve-out under super-voting control. Check: 2026-11-10. |
| 3 | Profit not keeping up with sales (was #3) | Net income growing at a fifth of the revenue rate; tax rate 35%. Check: 2026-11-10. |
| 4 | Monee credit cycle (was #2, now lower) | Reserves are now keeping pace with the book, but the mix is riskier. Check: 2026-11-10; Indonesia's buy-now-pay-later cap from 2027. |
| 5 | Indonesia country risk and currency (was #5 and #7, merged) | MSCI warning, rupiah near its record low. Check: MSCI decision (date unknown); Q3 currency disclosure on 2026-11-10. |
| 6 | Valuation and macro (was #4) | The 10-year yield is about 5%, and December has 71% odds of a rate hike. Check: Fed meetings on 2026-10-28 and in December. |
| 7 | Free Fire concentration (was #6) | Bookings slowing, deferred revenue drained. Check: 2026-11-10 (bookings). |
| 8 | Governance (was #8) | Raised by the Monee carve-out question. |
| 9 | Analyst downgrade cycle (was #9) | 26 of 28 still say Buy, so there is room to cut. |
| Validator | Current | Check by |
|---|---|---|
| Shopee GMV ≥ +24% with take rate ≥14.3% | +28.4%, 14.59% | 2026-11-10 |
| Shopee adjusted EBITDA ≥$261M a quarter (on pace for $1B) | $255.4M | 2026-11-10 |
| Monee loans 90+ days late ≤1.2%, and reserve growth ÷ loan growth ≤1.5x | 1.0%, 0.98x | 2026-11-10 |
| Group net income growth ≥ one-third of revenue growth | 10.6% vs 48.1% (fails today) | 2026-11-10 |
| Sea Cloud spending quantified, with capex below 30% of operating cash flow | Not disclosed; Q2 capex 24% of operating cash flow | 2026-11-10 |
| New buyback authorization of $1B or more | About $401M left | 2026-11-10 |
| Garena bookings ≥ +10% (compare on bookings; the EBITDA definition changes) | +15.5% | 2026-11-10 |
| Q3 fund filings: growth-fund selling stops | Q2: 418 added / 305 cut | ~2026-11-14 |
| Insiders: no new sales below $100; any open-market buy | 0 buys | Rolling (Form 4s) |
| Brazil: share rising, loan book growing without late-loan spikes | Brazil 15–16% of Monee loans | 2026-11-10 |
| Breaker | Action | Status | Check by |
|---|---|---|---|
| Shopee regional share below 50%, or any take-rate cut of more than 30 basis points vs the prior quarter | EXIT | Not triggered (55%; take rate up) | 2026-11-10 |
| Loans 90+ days late above 2% | EXIT | Not triggered (1.0%) | 2026-11-10 |
| REPLACES "loan-loss charges > Monee adjusted EBITDA": (a) reserve growth ÷ on-book loan growth above 1.5x for two straight quarters, or (b) Monee adjusted EBITDA down vs the prior quarter for two straight quarters, or (c) annualized loan-loss charge above 28% of average on-book loans | EXIT | Not triggered (0.98x; $288.0M up vs Q1; 23.6%) | 2026-11-10 |
| Subsidy war (clarified): group sales and marketing growing faster than revenue for a third straight quarter, while GMV growth slows and value-added-services revenue falls again | EXIT | Two of three quarters already (letter triggered in Q2) | 2026-11-10 |
| NEW: open-ended Sea Cloud: a 2027 capex guide above $1.5B with no outside revenue or contracts, or Q3 capex above $500M | EXIT | Pending disclosure | 2026-11-10 |
| NEW: Monee carve-out against minority holders: Sea sells more than 25%, or loses control or consolidation | EXIT | Pending | When announced |
| Free Fire ban in a top-3 market (Indonesia, Brazil) | EXIT | Not triggered | Rolling |
| Jakarta rule that hits local platforms rather than cross-border rivals | EXIT | Not triggered | Rolling |
| Forrest Li sells stock outside the disclosed 2025-09-10 plan, or below $100 | EXIT | Plan sales at $120 or more triggered v1's broader rule on 2026-08-11 (honored, Verdict tab) | Rolling (Form 4s) |
| Price: weekly close below $55 | STOP ADDING, re-underwrite | $74.01 (not an exit) | Weekly |
| Price: death cross confirmed (~2026-11-02) | CAP SIZE | Pending. Half of the v1 tranche until a weekly close above the 200-day average (≈$99) | ~2026-11-02 |
Every version of this report, newest first. Below that: what we still do not know and when we expect to find out, then every public source used. The two biggest unknowns are new: how much Sea Cloud will cost, and how a Monee listing would be structured.
v2.0 — 2026-10-26 (Liquid Wheel Research · quarterly refresh)
Stage-12 quarterly refresh after Q2 2026 (filed 2026-08-11) and the 2026-10-20 anniversary memo. Tracker graded every v1 claim (business claims mostly KEPT; price-path and entry calls mostly MISSED; capital-allocation and insider claims BROKEN). Ten v1 errors corrected, including the earnings-beat basis (now 2 beats / 6 misses like-for-like) and Li's own stake ($3.5B, not $10.96B). 8-quarter table rolled to Q3 2024–Q2 2026. Checklist re-graded to 9 PASS / 3 WATCH / 4 FAIL (insiders PASS → FAIL, efficiency PASS → WATCH). Moat 7/10, management 7/10. Scenarios re-run to $46 / $109 / $203; 15 priced downside scenarios added. v1 exit rule (weekly close below $75) FIRED and honored. New half-size plan: puts only before the 2026-11-10 print (Dec-18 $65 and $60; Nov-06 $70 only), post-print zones $69–72 / $62–66 / $55–58, no-chase $88, trims $85–88 / $93–95 / $100–104, stop-adds below $55. Breakers rewritten so each names its action. Verdict: 6.0/10 — IMPAIRED, ON WATCH. Classification: CONVICTION-SPEC (moat 7 < 9). Data as of close 2026-10-26 ($74.01).
Next scheduled review: interim check after Q3 2026 earnings (2026-11-10, unconfirmed); full v3.0 within a week of that print.
v1.0 — 2026-07-12 (Liquid Wheel Research · 5-agent deep-dive team)
Initial deep-dive: 16-gate checklist (11 PASS / 2 WATCH / 3 FAIL), three-engine flywheel map, 8-quarter financial longitudinal with GAAP-NI-vs-OCF bridge and bank-adjusted FCF, skin-in-the-game score (max), earnings tracker, dilution-adjusted FY2027 scenarios ($52 / $124 / $211), entry ladder ($95–100 / $86–91 / $78–83) with $116 no-chase line, wheel/CSP strikes, first-principles KPIs, known-unknowns ledger. Verdict: 7.5/10 — thesis INTACT, entry ON WATCH. Classification: CONVICTION-SPEC (moat 7.5–8 < 9 gate); size below the 10% Tier-1 cap. Data as of close 2026-07-10 ($111.14).
Next scheduled review: Q2'26 earnings (~mid-Aug 2026) — the reinvestment-vs-margin print is the live catalyst.
Public documents and URLs only. Tap a group to open it.
Every term, abbreviation and ratio used in this report, defined in one sentence, with Sea's current value where one exists. Anywhere on the page, a word with a dotted underline is in this list: hover over it, or tap it on a phone, to see the definition. Tags: CONFLICT means two research reviews disagree; UNVERIFIED means the figure has a single source or is derived.
| Term | Plain-English definition | Sea's value |
|---|---|---|
| 10b5-1 plan (pre-arranged trading plan) | A plan set up in advance that sells an insider's shares automatically on preset terms, so the timing is not a fresh decision. | Li's plan was adopted 2025-09-10 and sold 1,139,734 shares at $120–132. |
| 10-year Treasury yield | The interest rate on 10-year US government debt. It sets the bar every stock must beat. | About 5.00% on 2026-10-23. |
| 13F / 13G filing | Reports where big funds disclose their stakes, either every quarter (13F) or when they cross an ownership threshold (13G). | Baillie Gifford's 2026-09-30 filing shows 37.15M shares (6.55%). |
| 200-week moving average | The average of the last 200 weekly closing prices, about four years. Long-term buyers often defend it. | $93.98, about 21% above today's price. |
| 20-F | A foreign company's annual report to the US Securities and Exchange Commission (SEC). | Sea's 2025 20-F was filed 2026-04-17. |
| 6-K | A foreign company's interim filing with the SEC, used for quarterly results and news. | Sea's Q2 results and the 2026-10-20 memo were 6-Ks. |
| Adjusted EBITDA | Profit before interest, tax, depreciation and some non-cash items such as stock pay, as defined by the company. Roughly cash operating profit. | $917.2M in Q2 2026 (+10.6%). |
| Adjusted (non-GAAP) earnings per share | Earnings per share with items such as stock-based pay removed. Wall Street estimates are usually on this basis. | $0.84 in Q2 2026 vs a $0.86 estimate. |
| Allowance for credit losses (loss reserve) | Money Monee has set aside on its balance sheet for loans it expects to go bad. | $1,114.8M, 11.1% of on-book loans. |
| Annualized yield (options) | The option premium divided by the strike, scaled up to a full year so trades of different lengths compare fairly. | The Dec-18 $65 put yields 4.6% in 52 days, about 32% a year. |
| Assignment / assigned basis | Being required to buy the shares when a put you sold finishes below its strike. Your cost is the strike minus the premium you were paid. | $62.01 on the Dec-18 $65 put. |
| ATR-14 (average true range) | The average daily price range over the last 14 trading days, in dollars. | $3.66, about 5% of the price. |
| Bank-adjusted free cash flow | Operating cash flow minus spending on buildings and equipment minus new loans made. The honest cash number for a company that is part bank. | About −$644M in Q2 2026 (Q1: −$142M). |
| Basis point | One-hundredth of a percentage point. 100 basis points = 1 percentage point. | The take rate rose about 195 basis points (1.95 points) in a year. |
| Bollinger bands | A price channel drawn two standard deviations above and below the 20-day average. Touching the lower band means the price is stretched to the downside. | Upper $107.51, lower $73.71, where the stock sits. |
| Bookings (Garena) | Money players spent in Garena's games in the quarter, before accounting spreads it out as revenue. | $763.5M in Q2 2026 (+15.5%). |
| Breaker | A pre-written rule that says the investment case is broken. In v2 each breaker names its action: exit, or stop adding. | Several v1 breakers fired; see the Trade Plan tab. |
| Buyback | The company buying its own shares, which shrinks the share count so each remaining share owns more. | $416.8M in Q2; about $401M of the $1B program left. |
| Capex (capital expenditure) | Spending on buildings, servers and equipment. | $356M in Q2 2026, 2.6x Q1. |
| Capitulation | A burst of panicked selling on huge volume, when holders give up. It often marks a bottom, but not always. | Not confirmed yet: the 2026-10-26 low was a new low. |
| Carve-out | Listing part of a subsidiary on the stock market while the parent keeps the rest. | A possible Monee listing. |
| Cash-secured put (CSP) | You are paid now to promise to buy 100 shares at the strike price, with the cash set aside in case you have to. | The plan's preferred trade is the Dec-18 $65 put at about $3.00. |
| CCC bond yield | The yield on the lowest-rated junk bonds, a gauge of stress at the weakest borrowers. | 13.40%, +228 basis points. |
| Class A / Class B shares | Two share types. Class B carries 15 votes each; Class A carries one. | Li controls 57.6% of the votes. |
| Conglomerate discount | The lower price investors pay for a company that runs many unrelated businesses. | Scenario 8 assumes 15%. |
| Consensus | The average Wall Street analyst estimate. | Q3 2026: revenue $8.07B, adjusted earnings per share $0.97. |
| Constant currency | Growth with exchange-rate swings removed, so you see the real business change. | Sea does not disclose it. |
| Convertible notes | Bonds the holder could swap for shares at a set price. | $996.3M matured 2026-09-15 with a conversion price near $477, so cash repayment is presumed. |
| Conviction-spec | The framework's sizing tier for a company whose moat scores below 9/10. Positions are smaller than the top tier. | Sea's tier; the new position is half of v1's size. |
| Covered call | You are paid now to promise to sell shares you own at a higher strike price. | For example, the Jan-15 $95 call at $2.39. |
| CPI (consumer price index) | The main US inflation measure. | Headline 3.7%. |
| Current ratio | Short-term assets divided by short-term bills. The framework wants 2 or more. | 24,052.8 ÷ 16,094.4 = 1.49. |
| Days to cover | Shares sold short divided by average daily trading volume: how many days short sellers would need to buy back. | 2.9 days. |
| Death cross / golden cross | The 50-day average crossing below (death cross) or above (golden cross) the 200-day average. Traders read it as a trend change. | A death cross is expected about 2026-11-02. |
| Deferred revenue | Cash collected for things not yet delivered. It is counted as revenue later. | Garena's build was only +$16.9M in Q2 2026 (Q1: +$254.8M). |
| Delta (options) | Roughly the probability an option finishes in the money. | The Dec-18 $65 put is −0.25: about a 1-in-4 chance of assignment. |
| Diluted shares | The share count including options and convertible securities that could become shares. | About 634.5M. |
| Dilution | Growth in the share count, which shrinks each share's slice of the company. | Diluted shares fell 0.3% year on year in the first half of 2026. |
| DTE (days to expiry) | Days until an option expires. | The Dec-18 contracts had 52 days left on 2026-10-26. |
| Duopoly | A market dominated by two big players. | Cube, first half 2026: Shopee 55%, TikTok Shop 39% of the big three. |
| Effective tax rate | Tax paid divided by pre-tax profit. | 35.0% in Q2 2026 vs 25.2% a year earlier. |
| EIDO / QQQ | Exchange-traded funds that track Indonesian stocks (EIDO) and the Nasdaq-100 (QQQ). | QQQ −1.7% since 2026-07-10. |
| Enterprise value (EV) | Market cap plus debt minus cash: the price to buy the whole company, debts and all. | $40.36B (or $35.70B on a narrower definition). |
| Enterprise value / sales | Enterprise value divided by yearly revenue. | $40.36B ÷ $27.72B = 1.46x. |
| Escrow and deposits payable | Cash Sea holds for buyers, sellers and bank depositors. It sits on Sea's balance sheet as a short-term bill. | Deposits $4,285M, escrow $3,330M. |
| Fed funds rate | The Federal Reserve's main policy interest rate. | 3.75–4.00%. |
| Fibonacci retracement | A price level at a set fraction (0.236, 0.382, 0.5, 0.618, 0.786, 0.886) of a past move. Traders watch them as support or resistance. | The 0.886 level of the $55 → $199.30 move is $71.45. |
| Flywheel | A loop where each step makes the next one stronger, so the business speeds itself up. | Sea: games → mall → delivery → lending → profits back in. |
| Form 4 / Form 144 | SEC reports of an insider's trade (Form 4) or a planned sale (Form 144). | About 100 Form 4s since v1. |
| Forward P/E | Share price divided by next year's expected earnings per share. | $74.01 ÷ $5.10 (2027 estimate) = 14.5x. |
| Free cash flow | Operating cash flow minus spending on buildings and equipment: the cash left over. | $1,150M in Q2 2026; $4,423M over the last four quarters. |
| Free Fire | Garena's flagship mobile game, built for cheap Android phones. | A "significant majority" of Garena's revenue and profit (20-F). |
| FX (foreign exchange) | Changes in exchange rates. A stronger US dollar shrinks the dollar value of sales made in local currencies. | The dollar averaged 9.1% stronger vs the Indonesian rupiah in Q3. |
| GAAP | US generally accepted accounting principles: the standard rules for reported profit. | Q2 2026 GAAP diluted earnings per share: $0.70. |
| Garena | Sea's game-publishing arm. | Q2 2026 bookings $763.5M (+15.5%). |
| GDPNow | The Atlanta Fed's real-time estimate of current-quarter economic growth. | +3.5%. |
| GMV (gross merchandise value) | The total value of goods sold on Shopee, before Shopee's cut. | $38.3B in Q2 2026 (+28.4%). |
| Gross margin | Revenue minus direct costs, as a share of revenue. | 45.6% in Q2 2026. |
| High-volume node | A price range where many shares changed hands. It tends to act as a floor or a ceiling later. | $72.5–75 (105M shares traded since 2024). |
| High-yield (junk-bond) spread | The extra yield risky company bonds pay over US government bonds. A rising spread signals credit stress. | 3.40%, up 0.60 points in 20 days. |
| Implied volatility (IV) | The yearly price swing the options market is pricing in. Higher means options pay more. | Dec-18 at-the-money options imply 63.6%. |
| Investment-grade spread | The extra yield safer company bonds pay over US government bonds. | 0.89%. |
| IPO / listing | Selling a company's shares to the public for the first time. | Li's memo said Monee "may well ring that bell." |
| ISM surveys | Monthly business surveys. Above 50 means the sector is growing. | Manufacturing 54.5, services 54.9. |
| KPI (key performance indicator) | A number tracked to judge progress. | Eight first-principles KPIs on the Valuation tab. |
| Ladder / tranche | Buying in several planned pieces at different prices instead of all at once. A tranche is one planned block of money. | v2 zones A/B/C at 25/35/40% of a halved tranche. |
| Leases (as debt) | Rent owed on long-term property leases, counted as debt under accounting rules. | $1,905.9M. |
| Loans 90+ days late (NPL90+) | Non-performing loans: loans more than 90 days behind on payments, as a share of the loan book. | 1.0% at Monee. |
| MACD | A momentum indicator built from two moving averages. Below its signal line and falling means downward momentum. | Daily −7.20 vs signal −5.37, still falling. |
| Market cap | Share price times shares outstanding: what the stock market says the company is worth. | $74.01 × 612.48M = $45.33B. |
| Mid price (options) | Halfway between the bid (what buyers pay) and the ask (what sellers want). Use limit orders near it. | Dec-18 $65 put: 2.995 (2.84 / 3.15). |
| Moat | What protects a business from competitors taking its customers. | 7/10 for Sea (the framework's full-size bar is 9). |
| Monee | Sea's fintech arm: consumer loans, digital banks and wallets (formerly SeaMoney). | Q2 revenue $1,402.8M; loan book $11.1B. |
| MSCI | The company whose stock indexes guide trillions of dollars of fund money. | Warned on 2026-10-16 it may drop Indonesia from emerging-market indexes. |
| Multiple | Any price ratio, such as price-to-earnings. "The multiple shrank" means investors pay less per dollar of earnings or sales. | |
| Net cash | Cash and investments minus debt (excluding leases). | About $9.63B. |
| Net margin | Net income divided by revenue: cents of profit per dollar of sales. | $458.1M ÷ $7,787.8M = 5.9% in Q2 2026. |
| No-chase line | A price above which you do not start buying, because the reward no longer justifies the risk. | $88 in v2 (v1: $116). |
| Off-book loans | Loans Monee arranges but places with partner lenders, so they are not on Sea's balance sheet. | $1.1B of the $11.1B book. |
| Open interest | The number of option contracts currently open at a strike. Not in this refresh's data feed. | |
| Operating cash flow | Cash generated by day-to-day operations. | $1,506.0M in Q2 2026. |
| Operating margin | Operating profit divided by revenue. | 8.35% in Q2 2026 vs 9.27% a year earlier. |
| Oversold | A price that fell so far, so fast that a bounce is statistically more likely. It is not a buy signal on its own. | Daily RSI 17.7. |
| PEG | Price-to-earnings divided by the expected earnings growth rate. Below 1 suggests growth is cheap. | 0.73. |
| P/E (price-to-earnings) | Share price divided by earnings per share. | Trailing: $74.01 ÷ $2.59 = 28.6x. |
| P/FCF (price-to-free-cash-flow) | Market cap divided by free cash flow. | $45.33B ÷ $4.42B = 10.2x. |
| PM | Portfolio manager: the person who makes the final sizing and trade calls. "PM" marks that judgment. | |
| Price gap | A price range the stock jumped over without trading, for example between one day's low and the next day's high. Gaps often get "filled" later. | Unfilled overhead: $86.43–87.88 and $93.09–93.49. |
| Price target | An analyst's 12-month price estimate. | Consensus average $150.04; low $70. |
| Probability-weighted value | Each scenario's target times its odds, added up. | 0.15 × 203 + 0.50 × 109 + 0.35 × 46 ≈ $101. |
| Provisions (loan-loss charges) | The quarterly expense to top up the loss reserve for loans expected to go bad. A set-aside, not cash spent. | $555.2M in Q2 2026 (+71.5%). |
| P/S (price-to-sales) | Market cap divided by yearly revenue: what you pay for each $1 of sales. | $45.33B ÷ $27.72B = 1.64x. |
| QAU / QPU / ABPU (Garena) | Quarterly active users, quarterly paying users, and average bookings per user. | 666.3M / 68.1M / $1.15. |
| Realized volatility (RV) | How much the stock actually moved, annualized. | 30-day 40.6%, 60-day 50.4%. |
| Red team | A reviewer whose job is to argue the bear case as hard as possible. | Bear range $46–55. |
| Restricted cash | Cash Sea holds but cannot freely use, such as customer funds. | $2.46B, excluded from cash here. |
| Revenue per share | Yearly revenue divided by shares outstanding. Multiply by a price-to-sales ratio to get a price. | 27,723 ÷ 612.48 = $45.26. |
| Roll (options) | Closing one option and opening another with a later date or a different strike. | |
| RSI-14 (relative strength index) | A 0–100 momentum gauge over 14 days. Below 30 is oversold; below 20 is extreme. | Daily 17.7, the second-lowest since 2023. |
| Sales and marketing (S&M) | Spending on ads, promotions and subsidies to win buyers and sellers. | +64.5% in Q2 2026 vs revenue +48.1%. |
| Sea Cloud | Sea's new AI cloud business for outside customers, announced 2026-10-20. | No budget, revenue or timeline disclosed. |
| SEC | The US Securities and Exchange Commission, which receives company and insider filings. | Sea's company ID is 1703399. |
| Short interest | Shares sold short by traders betting the price falls. | 10.24M (3.12%), down 44% since v1. |
| SMA (simple moving average) | The average closing price over a set number of trading days (20, 50 or 200). | 50-day $102.48; 200-day $99.69. |
| SPayLater | Monee's buy-now-pay-later credit, increasingly used outside Shopee. | |
| SPX Express | Shopee's in-house delivery network. | Instant-delivery orders +~80%, cost per order −~20%. |
| Stock-based compensation (SBC) | Pay given in shares. A real cost that dilutes owners. | $131.9M in Q2 2026, the 6th straight decline. |
| Straddle | Buying a put and a call at the same strike: a bet on a big move either way. Its price shows the move the market expects. | Nov-13 $74 straddle: $10.65 (14.4%). |
| Strike | The price at which an option lets you buy or sell. | |
| Sum-of-parts | Valuing each business separately and adding them up. | DBS puts Monee alone at $18–22B. |
| Super-voting | Shares with more votes than their economic weight. | Li: 57.6% of votes on about 7.8% own economic stake. |
| Support / resistance | Price areas where buying (support) or selling (resistance) has tended to show up before. | |
| Take rate | Shopee's revenue as a share of GMV: Shopee's cut of every dollar sold. | 14.59% in Q2 2026 vs 12.64% a year earlier. |
| TAM (total addressable market) | The whole market a company could sell into. | About $190B a year for the big three Southeast Asian platforms (derived). |
| Tier-1 | The framework's top sizing tier. It requires a moat score of 9/10 or better. | Sea is not eligible (moat 7). |
| Trailing twelve months (TTM) | The last four reported quarters added together. | Revenue $27,723M. |
| Trim | Selling part of a position into strength. | v2's first trim band is $85–88. |
| Validator | A pre-written sign that the investment case is getting stronger. | |
| Value-added services (VAS) | Shopee's logistics and other fees charged to sellers. | $676.4M, −9.0%, because shipping subsidies are netted off. |
| VIX | A measure of expected US stock-market swings: the "fear gauge." | 19.10. |
| Weekly close | The Friday closing price. Rules use it so one bad day does not trigger them. | $74.63 on 2026-10-23. |
| Year over year / quarter over quarter | Comparing with the same quarter last year, or with the previous quarter. | Q2 2026 revenue +48.1% year over year. |