DBS cuts Sea price target to $105 on Shopee spending

DBS Group Research downgraded Sea to hold from buy on October 2, 2026, and cut its 12-month price target to $105 from $148. The research firm cited risks that Shopee investments to defend market position could slow profit-margin expansion in 2027. Sea shares have already dropped roughly 23% from their August 2026 peak following the launch of one-hour delivery in Indonesia and Thailand.

DBS projects Sea's 2027 e-commerce adjusted EBITDA will fall 5% below consensus and group adjusted EBITDA will miss by 6%. The broker pointed to Pinduoduo expanding into four Southeast Asian markets, exposing an estimated 10% to 13% of Shopee's gross merchandise value to competition, assuming cross-border sales represent 30% to 40% of that volume. Migoo, an artificial intelligence app launched in June by a Sea subsidiary, could also reduce 2027 adjusted EBITDA by $73 million to $175 million.

Quick-commerce pushes are estimated to reduce Shopee's 2026 adjusted EBITDA by 15% to 20%, easing to a 5% to 10% drag in 2027. Shopee's cost of revenue climbed 51.9% year-on-year in the second quarter due to logistics spending. DBS expects Shopee's adjusted EBITDA margin relative to gross merchandise value to reach 0.76% in 2027, up from 0.65% in 2026, but trailing the 1.8% to 1.9% margins estimated for Pinduoduo and Alibaba. Shopee still holds about 53% regional market share.

Outside e-commerce, gaming unit Garena is projected to generate 7% annual revenue growth between 2026 and 2028. Fintech unit Monee expanded its loan book 61% year-on-year to $11.1 billion in the second quarter, supporting margins of 20% to 21%. DBS values Sea at 21 times 2027 non-GAAP earnings, reflecting 24% projected annual non-GAAP earnings-per-share growth through 2028. In a downside scenario with heavier promotions from TikTok Shop, DBS sees the shares falling to $71 on a 16 times multiple and 20% earnings growth.