Sea Limited Shares Plummet Following TikTok’s Ambitions in the Indonesian E-commerce Market
Sea Limited (NYSE:SE) saw a staggering 6% drop in its stock price on Wednesday. This nosedive comes in the wake of reports that TikTok, owned by the Chinese tech giant ByteDance (BDNCE), is aggressively eyeing the Indonesian e-commerce sphere. TikTok’s imminent foray into this market is deemed a direct threat to Sea Limited’s operations in the region.
TikTok Set to Shake Up Indonesian E-commerce Market
The news from state media outlet Antara suggests that TikTok is poised to partner with various e-commerce platforms in Indonesia, provided it complies with the region’s regulations. Deputy Minister of Trade Jerry Sambuaga was quoted saying, “Earlier, TikTok did not conform to rules and did not have a permit (as an e-commerce platform). Once it has the permit, it can collaborate with anyone as long as it abides by applicable regulations and procedures.”
As the report detailed, TikTok is feverishly working to adhere to the stipulated rules. This development follows TikTok’s suspension of e-commerce transactions within its TikTok Shop app in Indonesia, triggered by the country’s ban on direct e-commerce payments through social media channels. The latest legislation in September prohibited social commerce companies from enabling direct e-commerce transactions.
Consequences for Sea Limited and the Indonesian Business Landscape
The Indonesian government’s stance seems particularly protective of smaller enterprises, emphasizing the need to shield micro, small, and medium enterprises (MSMEs) from any detrimental effects of the collaboration between TikTok and e-commerce platforms.
Prior to this revelation, Citi previously lauded the potential regulatory move, deeming it a favorable turn of events for traditional e-commerce players in Indonesia, specifically highlighting Sea Limited (SE). The financial institution highlighted the heightened competition between TikTok and Sea’s e-commerce platform Shopee, viewing the potential rule as a positive development for the latter. However, the implications of TikTok’s aggressive entry into the market may now call into question the optimistic outlook projected earlier.
As investors reel from the consequences of these unfolding events, the financial community will keenly monitor the response of Sea Limited and the broader e-commerce landscape in Indonesia.
Seeking Alpha’s Ravikash contributed to this story.