SE Plunges 2.95% Amid Sector Turbulence: What’s Fueling the Selloff?

Summary
• Sea (SE) trades at $180.43, down 2.95% intraday with a range of $179.75–$186.00.
• Turnover hits 810,964 shares, outpacing its 0.15% turnover rate.
• Analysts highlight MercadoLibre’s loan risks and sector-wide e-commerce volatility as key themes.

Sea’s sharp decline has captured market attention, with the stock trading below its 52-week high of $199.30. The move coincides with broader e-commerce sector jitters, as investors weigh concerns over MercadoLibre’s profitability and shifting analyst sentiment. With technical indicators flashing caution and options activity surging, the question looms: is this a buying opportunity or a warning sign?

MercadoLibre's Loan Growth Concerns and Analyst Downgrades Weigh on SE
The selloff in Sea (SE) is directly tied to cross-sector spillover from MercadoLibre (MELI), a key competitor in Latin American e-commerce. Recent reports highlight MercadoLibre’s rapid loan growth as a potential profitability headwind, raising fears of similar risks in the broader e-commerce fintech space. Compounding this, Zacks and Simply Wall St. have downgraded SE’s valuation outlook, citing overvaluation after recent gains. Additionally, analyst ratings from Arete and others have shifted to 'Neutral,' signaling reduced conviction in Sea’s growth trajectory. These factors have triggered profit-taking and risk-off sentiment, particularly as investors reassess exposure to high-PE stocks like SE (PE: 66.02).

E-Commerce Sector Mixed as Amazon Gains 0.09%
While Sea (SE) tumbles, the broader e-commerce sector shows divergence. Amazon (AMZN) rises 0.09%, buoyed by its Prime settlement and AI-driven retail strategies. However, peers like Etsy (DASH) and JD.com (JD) face pressure from shifting consumer spending patterns and tariff-related costs. This fragmentation underscores the sector’s vulnerability to macroeconomic shifts and competitive dynamics, with Sea’s fintech and gaming segments under particular scrutiny.

Options Playbook: Capitalizing on Volatility and Key Levels
• 200-day MA: $143.74 (well below current price)
• RSI: 40.8 (oversold territory)
• MACD: -1.69 (bearish divergence)
• Bollinger Bands: Lower band at $179.94 (near current price)

Sea’s technicals suggest a short-term bearish bias but a long-term bullish trend. Key support levels at $179.94 (lower Bollinger) and $117.70 (200D MA) are critical for near-term direction. Aggressive traders may consider the following options:

• SE20251003P170 (Put, $170 strike, 10/3 expiry):
- IV: 41.50% (moderate)
- Delta: -0.1246 (moderate sensitivity)
- Theta: -0.0213 (slow decay)
- Gamma: 0.018374 (moderate responsiveness)
- Turnover: 501 (liquid)
- Leverage: 256.28% (high reward potential)
- Payoff (5% downside): $180.43 → $171.41 → max gain of $28.59 per contract.
- Why it stands out: Balances leverage and liquidity, ideal for a 5% downside scenario.

• SE20251003C180 (Call, $180 strike, 10/3 expiry):
- IV: 25.33% (low)
- Delta: 0.630058 (high sensitivity)
- Theta: -0.7396 (rapid decay)
- Gamma: 0.055335 (high responsiveness)
- Turnover: 3,220 (very liquid)
- Leverage: 46.66% (moderate reward)
- Payoff (5% downside): $180.43 → $171.41 → max loss of $8.59 per contract.
- Why it stands out: High gamma and liquidity make it a viable hedge against a rebound.

Action: Aggressive bears may target SE20251003P170 for a 5% downside play, while SE20251003C180 offers a high-gamma hedge. Watch for a break below $179.94 to confirm bearish momentum.

Backtest Sea Stock Performance
Below is an interactive event-backtest panel that summarises how Sea Ltd (SE) has behaved after every –3 % (or larger) intraday drop since 2022.Key takeaways (see panel for full statistics):• 124 qualifying drops were detected between Jan-2022 and today. • Median post-event performance is essentially flat; average 5-day gain ≈ +1 %, win-rate ~54 %. • None of the horizons out to 30 trading days showed statistically significant alpha vs the benchmark. • Momentum fades quickly: by day-10 the win-rate falls back to 50 % and the cumulative excess return turns negative.Feel free to explore the interactive table/plots in the panel; let me know if you’d like a different holding window, additional risk filters or a strategy implementation back-test.

SE at a Crossroads: Watch $179.94 and Sector Catalysts
Sea’s 2.95% drop reflects a mix of sector-specific risks and valuation concerns, but its long-term bullish trend remains intact. The 52-week low of $92.50 is distant, but near-term support at $179.94 and $117.70 will be critical. Investors should monitor Amazon’s 0.09% gain for sector sentiment and MercadoLibre’s loan strategy for cross-impact. For now, the key takeaway: Aggressive bears target SE20251003P170 if $179.94 breaks, while bulls hedge with SE20251003C180.