Shares of Sea Limited (NYSE:SE) gained about 12% in yesterday’s trading session. The upside can be attributed to expectations of potential regulatory changes by the Indonesian government about laws governing the use of social media for e-commerce.
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Sea is a Singapore-based technology company known for its digital entertainment, e-commerce, and financial services platforms.
The new regulations are expected to be implemented by September 27, 2023. The government’s decision to address this issue came after reports highlighted that e-commerce sellers employing predatory pricing strategies on social media platforms were posing a threat to traditional offline markets in Indonesia.
Moreover, the reports specifically mentioned the video platform TikTok. These new rules are anticipated to create hurdles for the smooth integration of e-commerce features within TikTok Shop.
It is worth mentioning that Sea’s e-commerce platform Shopee faces stiff competition from TikTok’s Shop. The regulatory changes could impact TikTok’s performance in Indonesia, potentially benefiting Sea. This is because about two-thirds of Sea’s revenue in the second quarter of 2023 came from its e-commerce segment. Thus, any positive developments in Indonesia could have a substantial impact on the company’s overall performance.
Following the news, Citi analyst Alicia Yap reiterated a Hold rating on SE stock with a price target of $50. The analyst anticipates that the disruptions that TikTok sellers may face during the transition period could potentially benefit Shopee and other conventional e-commerce platforms in the months ahead.
What is the Forecast for SE Stock?
Wall Street analysts are currently projecting a 61.7% increase in SE stock price to $65.02. Overall, Sea stock has a Moderate Buy consensus rating based on 10 Buys and seven Holds. Shares of the company have declined by about 29% so far this year.
