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Sea Limited (SE) Reportedly Hikes Merchant Fees to Boost Profit
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Sea Limited’s (SE - Free Report) shares have surged 65.3% compared with the Zacks Internet - Software industry’s growth of 9.7%. The rise in stock price reflects investors’ confidence in SE’s portfolio strength and cost management initiatives.
Sea Limited is also focusing on enhancing its profits by raising commissions on merchants. According to a report by Bloomberg, it has increased approximately one-third in the commissions it charges merchants in several key markets since the beginning of the year. This will allow Sea Limited to increase its bottom line while hoping that merchants won’t switch to other platforms given the company’s much stronger offerings.
SE has improved the delivery speed of its SPX Express. In second-quarter 2024, more than 70% of SPX Express orders in Asia were delivered within three days while cost per order declined 8%.
Sea Limited’s growing efforts to enhance operational capabilities and improve the quality of services are driving its quarterly performance. In its recently reported financial results for second-quarter 2024, the company’s revenues soared 23% year over year to $3.81 billion and surpassed the Zacks Consensus Estimate of $3.73 billion.
Sea Limited benefits from the growing demand for logistics operations. Furthermore, by reducing SPX Express’ delivery time, the company has been able to reduce cost per order.
Challenges of Increasing Commissions
The global e-commerce market comprises giants like Alibaba (BABA - Free Report) , Amazon (AMZN - Free Report) and Walmart (WMT - Free Report) , who are trying to acquire greater market shares in the fastest-growing e-commerce markets of the United States, China, Japan, Germany and the U.K.
Alibaba is the largest player in the Asian market. Amazon and Walmart have captured 20% and 2% of the global e-commerce space, respectively, per a Statista report. Moreover, social media sites, including Facebook, TikTok, Instagram and Pinterest, are also dominant in the online shopping space.
With direct competition from TikTok, Temu, Lazada and other dominant e-commerce players, Sea Limited runs at the risk of losing merchants to its rivals. Per the Bloomberg report, SE has increased its commissions to 13% in July compared with TikTok’s 8% and Lazada’s 10%. This significant hike in merchant fees might prompt them to switch to Sea Limited’s direct rivals.
SE carries a Zacks Rank #5 (Strong Sell) at present.
Image: Bigstock
Sea Limited (SE) Reportedly Hikes Merchant Fees to Boost Profit
Sea Limited’s (SE - Free Report) shares have surged 65.3% compared with the Zacks Internet - Software industry’s growth of 9.7%. The rise in stock price reflects investors’ confidence in SE’s portfolio strength and cost management initiatives.
Sea Limited is also focusing on enhancing its profits by raising commissions on merchants. According to a report by Bloomberg, it has increased approximately one-third in the commissions it charges merchants in several key markets since the beginning of the year. This will allow Sea Limited to increase its bottom line while hoping that merchants won’t switch to other platforms given the company’s much stronger offerings.
SE has improved the delivery speed of its SPX Express. In second-quarter 2024, more than 70% of SPX Express orders in Asia were delivered within three days while cost per order declined 8%.
Sea Limited Sponsored ADR Price and Consensus
Sea Limited Sponsored ADR price-consensus-chart | Sea Limited Sponsored ADR Quote
Sea Limited’s growing efforts to enhance operational capabilities and improve the quality of services are driving its quarterly performance. In its recently reported financial results for second-quarter 2024, the company’s revenues soared 23% year over year to $3.81 billion and surpassed the Zacks Consensus Estimate of $3.73 billion.
Sea Limited benefits from the growing demand for logistics operations. Furthermore, by reducing SPX Express’ delivery time, the company has been able to reduce cost per order.
Challenges of Increasing Commissions
The global e-commerce market comprises giants like Alibaba (BABA - Free Report) , Amazon (AMZN - Free Report) and Walmart (WMT - Free Report) , who are trying to acquire greater market shares in the fastest-growing e-commerce markets of the United States, China, Japan, Germany and the U.K.
Alibaba is the largest player in the Asian market. Amazon and Walmart have captured 20% and 2% of the global e-commerce space, respectively, per a Statista report. Moreover, social media sites, including Facebook, TikTok, Instagram and Pinterest, are also dominant in the online shopping space.
With direct competition from TikTok, Temu, Lazada and other dominant e-commerce players, Sea Limited runs at the risk of losing merchants to its rivals. Per the Bloomberg report, SE has increased its commissions to 13% in July compared with TikTok’s 8% and Lazada’s 10%. This significant hike in merchant fees might prompt them to switch to Sea Limited’s direct rivals.
SE carries a Zacks Rank #5 (Strong Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.