Last night, Sea Ltd, the parent company of Shopee, released its first-quarter financial results for the 2026 fiscal year—its stock price rose over 13% following the announcement. Shopee's gross merchandise value (GMV) increased by 30% year-over-year, while its EBITDA declined by 9% year-over-year. Both figures are stated in the report, yet it appears all sell-side analysts focused solely on the first number. During the earnings call, management attributed the quarter's narrative to three key initiatives: investments in logistics, fulfillment, and the VIP membership program. Post-call sell-side reports largely echoed this framing. Multiple major investment banks maintained "Buy" ratings, though some lowered their target prices. As usual, analysts overlooked the truly significant story.
※ The Substantial Scale of Instant Retail Management noted that Q1 instant delivery order volume grew 35% year-over-year, with per-order costs decreasing by 20%. The platform has integrated 7,000 convenience stores and pharmacies, including chains like Indonesia's Indomaret. In fact, instant retail now accounts for a single-digit percentage of Shopee's overall GMV. We also believe that, driven by Shopee, the instant retail market in Southeast Asia has surpassed the scale of the previously hotter fresh grocery instant delivery segment. Grab is also continuously expanding the categories and volume of its GrabMart service. Competition in Southeast Asia's instant retail sector warrants greater market attention.
※ Proactive Defense Against TikTok Shopee's traditional moat—buying traffic combined with a broad product catalog—is being challenged by TikTok Shop in Southeast Asia. Content-based e-commerce generates traffic organically, giving it a structural advantage in customer acquisition costs compared to Shopee. In some markets, TikTok Shop's parcel volume has already exceeded Shopee's, and its GMV is drawing closer. According to our calculations in the "Southeast Asia E-commerce Report 2026," TikTok's total e-commerce GMV in Southeast Asia reached 65.7% of Shopee's last year, indicating that the gap in market share has further narrowed by year-end.
However, TikTok Shop cannot easily enter the instant retail space—or faces significant barriers to doing so in the short term. Instant retail requires local warehousing and delivery networks, rider networks, and merchant integrations at the individual store level. Even potential local delivery partners would likely encounter substantial integration challenges. Through its operation of ShopeeFood, Shopee has already established most of the necessary infrastructure. Instant retail is a territory TikTok Shop cannot quickly penetrate. Moreover, it is a high-frequency business; each order keeps users within the Shopee app.
Additionally, TikTok Shop faces maturity challenges in precision content distribution based on geolocation. This script mirrors what unfolded in the domestic Chinese market: after the rise of Douyin E-commerce, Taobao, JD.com, and Meituan essentially executed the same defensive playbook—using high-frequency, proximity-based, geographically anchored retail services to counter low-frequency, distant, and less locally focused content e-commerce. Shopee is running the same playbook in Southeast Asia, and it is currently executing it well. Yet this logic is scarcely covered in sell-side reports.
※ A Fragmented Story When Viewed by Segment The commission rate structure for instant retail is fundamentally different from that of traditional e-commerce—fulfillment costs are heavier, and consumers are more price-sensitive. Rapid growth in this business affects the overall blended commission rate figure. Order volume up 35% and per-order cost down 20%—yet these are not the primary reasons for Shopee's 38% revenue growth and 9% EBITDA decline.
Another piece of the puzzle is the digital financial business, Monee. Monee's loan balance reached $9.9 billion, a 71% year-over-year increase, with adjusted EBITDA growing 14%. (If not for currency fluctuations triggered by the Middle East situation in March, this loan balance would likely have exceeded $10 billion.) Consider that a credit book of this scale and growth rate should generate net interest and fee income exceeding the reported $275 million EBITDA. The discrepancy reflects internal cross-departmental cost allocations and resource distribution within the group.
If Sea's three business segments are analyzed as separate companies, the Q1 numbers appear disjointed: Shopee's margins are compressing, Monee's loan book is expanding rapidly, and the gaming business Garena is gradually recovering. However, if viewed as an integrated whole—a system capable of allocating capital and resources internally—the picture becomes complete: Monee's cash flow capabilities are funding Shopee's defensive investments in instant retail, fulfillment, and user acquisition.
This is not a critique. In fact, it signifies maturity. Ant Group under Alibaba, JD.com's JD Digits, and even ByteDance—every leading Chinese internet conglomerate has gone through a phase where the cash flow from its financial segment "transfused" the investment cycles of its e-commerce segment. Sea's current mode of operation has reached this level of maturity—a nuance likely lost on many market observers.
※ Analysts Missing the Point During the Q&A session of the earnings call, no one asked the following questions: What is the GMV contribution of instant retail? How do different segments contribute to Shopee's EBITDA? How are corporate costs and intra-group service fees allocated across businesses? These are not aggressive questions. They are natural inquiries for anyone seeking to understand Sea as an integrated system rather than fitting it into a static model. No analyst asked them on the call. This fact reflects the current state of sell-side focus on Sea—and likely the approach to observing all Southeast Asian platform companies.
The analytical frameworks used by mainstream investment banks were built for these companies' previous stages. They are no longer suited to the complexity Sea exhibits today.
※ Key Focus Areas Moving Forward By many metrics, Q1 2026 was a strong quarter for Sea Ltd. It was also a quarter that revealed Sea's true operational approach: as an integrated group, using instant retail to defend against TikTok Shop, partially funded by a rapidly expanding consumer credit business. This is a more compelling story than "GMV up 30%." It is also the story most analysts have not told.
【New Report Release】 Momentum Works' upcoming report, "Quick Commerce in Southeast Asia 2026," provides an in-depth analysis of the competitive landscape, unit economics, and platform strategies in this rapidly evolving arena—including players, partnerships, and the capital allocation logic behind strategic decisions that do not appear in financial reports. Stay tuned for the release on the Momentum Works public account next week!
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