According to Fortune, Sea shares plunged over 8% in Tuesday trading despite reporting $6 billion in revenue for the quarter ending September 30, 2025 – a 40% year-over-year increase. Net income jumped 145% to $375 million, but that still fell short of analyst expectations of $433 million. All three business divisions saw double-digit growth, with Shopee’s gross merchandise value hitting $32.2 billion, up 28.4% year-over-year. The company’s operating expenses surged 28% as it invests heavily in logistics to compete with rivals like Alibaba’s Lazada and ByteDance’s TikTok Shop. CEO Forrest Li highlighted Taiwan’s automated locker network, which has grown to over 2,500 locations in under three years and reduces delivery costs by 30%.
The high cost of winning
Here’s the thing about being a market leader – you can’t ever stop spending. Sea is basically in an arms race with TikTok Shop and Lazada, and that 28% jump in operating expenses tells the real story. They’re building out logistics networks, expanding delivery capabilities, and apparently opening automated lockers everywhere. The market reaction seems harsh given all the growth metrics, but when you miss profit expectations by that much, investors get nervous.
And you know what? This is exactly what happens when you’re competing in emerging markets. You can’t just sit back and count your profits – you have to keep reinvesting to stay ahead. Sea’s playing the long game here, sacrificing some quarterly profits to build infrastructure that’ll pay off down the road. But Wall Street has zero patience for that kind of thinking.
Gaming and fintech carrying the load
While everyone focuses on Shopee, Garena and Monee are quietly becoming absolute workhorses. Garena just had its best quarter since 2021 with bookings up 51.1% year-over-year. That’s massive. And it’s all thanks to Free Fire running those Squid Game and Naruto campaigns – proof that licensed content still moves the needle in gaming.
Meanwhile, Monee’s loan book expanded 70% while maintaining stable risk. That’s the kind of growth fintech investors dream about. Basically, these two divisions are giving Sea the breathing room to go all-in on e-commerce competition without completely tanking the entire company.
The global expansion dilemma
Sea’s approach to international markets feels… cautious. They’re re-entering Argentina while pulling back from Chile and Colombia. CFO Hou Tianyu called it a “highly selective approach,” which sounds corporate for “we’re being careful with our money.” Can you blame them? After burning cash in failed markets before, they’re probably gun-shy.
But here’s what interests me – Taiwan seems to be their secret weapon. Those 2,500 automated lockers reducing costs by 30% per order? That’s the kind of operational efficiency that could make or break their competitive position. If they can replicate that model elsewhere, they might actually have a shot against the deep-pocketed competition.
The real question is whether investors will stick around long enough to see these investments pay off. Because right now, Sea’s spending like there’s no tomorrow while the market reacts like there might not be one. It’s a classic growth versus profitability tension, and honestly? I’m not sure which side will win.
