Sea Ltd Stock Tumbles After TikTok-GoTo Deal Threatens Indonesian Market Share

Zinger Key Points
  • Merger of businesses will allow TikTok access to Indonesian e-commerce
  • Sea Ltd's Shopee stands to lose market share with TikTok in the market

Shares in Sea Ltd SE fell sharply in early trade after TikTok, the video hosting platform, reported it was taking a controlling stake in the e-commerce subsidiary of GoTo Gojek Tokopedia, Indonesia’s biggest tech company.

Sea Ltd owns e-commerce platform Shopee — the largest online retailer in Southeast Asia. According to data published by Seeking Alpha, the Singapore-based tech conglomerate commands 36% of Indonesia’s e-commerce gross merchandise value, worth around $18.6 billion in 2022.

Shares in Sea Ltd have had a tumultuous ride since listing at $16.25 on NYSE in October 2017. They hit a pandemic peak of $372 in October 2021 before falling precipitously over the subsequent year. On Monday, the shares fell 6.5% in early trade to $37.60.

Also Read: TikTok Pumps $1.5B Into Indonesia’s GoTo Group To Revive Shopping App

Indonesian Ban On Social Media E-Commerce

The shares had a bump higher in September after the Indonesian government banned goods transactions on social media websites such as TikTok, to preserve the livelihoods of small and medium-sized retailers which struggled to compete with the media giants.

“Now, e-commerce cannot become social media. It is separated,” said trade minister Zulkifli Hasan at the time, adding that the new regulation would help ensure “equality in business competition.”

TikTok’s $1.5 billion deal with GoTo will merge TikTok Shop with Tokopedia, with TikTok taking a controlling 75% stake in the combined entity.

More than 90% of the combined businesses’ merchants are the small and medium-sized enterprises that the regulations sought to protect. Thus, TikTok can do business again in Indonesia, under the scrutiny of the regulator.

Working With Regulators

In a joint statement, the two companies said: “The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators.”

It added: “Going forward, TikTok, Tokopedia and GoTo will transform Indonesia's e-commerce sector, creating millions of new job opportunities over the next five years.”

Shares in other e-commerce firms that operate in Indonesia were down on the local exchange. Bukalapak, fell 3.5%. Shares in Goto, meanwhile, tumbled 20%.

Now Read: Is Amazon Gearing Up for a Fashion Showdown?

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: EquitiesNewsRegulationsTop StoriesStartupsMarketsTechGeneralShopeeStories That MatterTikTokTokopedia
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!