Sea Ltd (SE) Shares Drop 9.56% as U.S. Tariff Fears Spark Selloff Despite Strong Performance

Sea Ltd (SE) shares fell to a 2025 low on Wednesday, tumbling 10.33% intraday and closing 9.56% lower for a two-day decline of 10.50%. The selloff reflects broader market concerns over U.S. trade policy impacts, despite the company’s diversified business model and strong financial performance. Analysts note the move may represent a technical correction rather than a fundamental shift in Sea’s long-term trajectory.

The recent volatility follows the U.S. announcement of tariffs targeting key Southeast Asian markets, including Vietnam and Indonesia. While Sea’s e-commerce and fintech operations are not directly linked to tariff-affected goods, the broader market sell-off created a contagion effect. This has sparked debate among investors, with some viewing the decline as an overreaction to macroeconomic risks rather than a threat to Sea’s core business resilience.

Sea’s year-to-date rally of 72% has left the stock vulnerable to periodic corrections. A 5% pullback in recent sessions has triggered profit-taking after a year of rapid growth, fueled by 29% revenue expansion in 2024 and a tripling of net income. The stock’s forward P/E ratio of 27.9 remains elevated, reflecting optimism about its high-growth fintech and gaming segments but deterring short-term traders wary of valuation risks.

Institutional investor activity has been mixed, with some funds increasing stakes while others trimmed positions. Baird Financial Group and Vident Advisory LLC added to their holdings, whereas Panagora Asset Management Inc. reduced its stake. Despite this divergence, the broader analyst consensus remains cautiously optimistic, with a “Moderate Buy” rating. Sea’s ability to generate positive adjusted EBITDA across all business lines—including 38% e-commerce growth in Southeast Asia and a 60% increase in SeaMoney loan volume—supports its appeal to long-term investors.

Strategic expansion into Brazil and fintech lending has further diversified Sea’s revenue streams. The company’s e-commerce platform grew 40% in monthly active users in Brazil in Q4 2024, while its lending unit achieved break-even adjusted EBITDA for two consecutive quarters. These developments highlight Sea’s capacity to replicate its Southeast Asian success in new markets, a key driver for sustained cash flow generation and long-term value creation.

With $10 billion in cash reserves, Sea maintains financial flexibility to fund growth initiatives. This balance sheet strength positions the company to navigate macroeconomic headwinds, including rising interest rates, while continuing to invest in high-growth areas. Analysts argue the recent tariff-driven sell-off is an overreaction, as Sea’s operations remain insulated from direct trade policy impacts. The stock’s current dip may offer a strategic entry point for investors aligned with its long-term growth narrative.