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Sea Limited (NYSE:SE) was downgraded to Neutral from Overweight by J.P. Morgan due in part to increased competition from TikTok (BDNCE) and Temu (PDD).
“Incremental increases in competition are now likely to cap positive earnings revisions and share price in the near-term, in our view,” said J.P. Morgan analysts Ranjan Sharma, Sigrid Qiu and Alex Yao, in a note.
J.P. Morgan also reduced its price target on the Singapore-based company to $78 from $84.
Sea Limited operates three core online businesses, including e-commerce, digital financial services and digital entertainment. Its share price has increased nearly 90% year to date.
“In our view, the high take rates on Shopee increase the propensity for sellers to look for alternative platforms,” Sharma added. “Hence, the incremental increase in competition could result in higher than expected S&M spending from Shopee to manage its market share.”
Sea Limited has a Buy rating from both Seeking Alpha and Wall Street analysts. However, it has a Hold rating from Seeking Alpha’s Quant system, which routinely beats the market.