Wedbush cautious on Sea profit trajectory amid TikTok partnership with Tokopedia

Wedbush analyst Scott Devitt notes that on Monday, TikTok and Tokopedia announced a strategic partnership. TikTok Shop’s Indonesia business will be acquired by Tokopedia for $340M in Q4 2023 and combined under the existing PT Tokopedia entity. TikTok will then acquire a majority stake in the combined entity for $840M, with GoTo retaining a non-dilutive 24.99% stake in the business, the firm adds. As the e-commerce landscape remains highly competitive, Wedbush is “incrementally cautious” on Sea Limited’s near-term profit trajectory as elevated investments in Shopee are unlikely to meaningfully abate in 2024 as the company continues to fight to maintain market share and develop its live-streaming capabilities to compete more directly with TikTok Shop. The firm has an Outperform rating on Sea’s shares with a price target of $45.