9Teeder.eth || thearistocrat.eth

We in it for the art. We stay for the culture. 🦾🛹🤙🏻 #repeatoffenders #makemoreart @PvnksOfficial #NFTCommunity #nfts

@GabGrowth Stellar breakdown - really nicely done. Been looking into $SE for about a month and this is the best analysis I’ve seen - thanks for the work 🤙🏻

$SE COMPREHENSIVE BULL THESES, BEAR THESES DEBUNKED, THE REAL RISKS AND VALUATION. BULL THESES (8 POINTS): 1. THE Dominant SEA E-Commerce Business Shopee commands a world leading ~50% market share of GMV in Southeast Asia, surpassing the regional dominance of global e-commerce leaders like Amazon and MercadoLibre (35-45% market share in their respective markets). Despite entering as a late entrant, Shopee has successfully outmanoeuvred both established rivals (Lazada, Qoo10) and local competitors (Tokopedia, Bukalapak) to achieve market leadership. With the competitive landscape now stabilising, industry focus has shifted toward take rate optimisation and margin improvement. Notably, recent pressure from TikTok Shop's entry has primarily impacted smaller competitors (Lazada, Tokopedia, Bukalapak) while Shopee has consistently gained market share. (2020: 24.3%, 2024: 55.1%). Shopee is poised to maintain its dominance while driving profitability, as evidenced by the 100 basis point take rate improvement YoY. No company would increase take rates if they continue to see competition eating into their market share. At present, the ratio of cost of sales & marketing to GMV remains elevated, reflecting the competitive market dynamics at play. Assuming Shopee corners a large portion of the market, smaller competitors will simply be priced out of the market as a result of its vertically integrated value chain. At its current scale, Shopee faces no credible competitors capable of matching it head-to-head. As rivals scale back promotional spending due to funding constraints, Shopee’s ability to further raise take rates will likely serve as a key driver of profitability. Over the past 3 years, Shopee has leaned into creating a moat around the business, particularly through a vertically integrated value chain. Shopee formerly relied on 3rd party logistics partners for all deliveries. Today, more than 50% of Shopee’s Asia orders are handled by its proprietary SPX logistics business. In Brazil, this figure exceeds 70%. Apart from increasing coverage, Shopee is also reducing the cost and increasing the quality of orders with half of the orders delivered within 2 days in Asia. Shopee is also working on optimising first-mile pickup, increasing automation in sorting centers, improving line haul utilisation, and innovating on last-mile delivery formats. 2. Competitive Resilience; Growth amidst Troubles It is important to understand the history of Shopee to fully comprehend the future prospects of the business. Shopee launched in 2015 in the midst of a backdrop of established players such as Tokopedia, launched in 2009, Lazada, launched in 2012 and backed by Alibaba. Several other players were involved which have since been rendered obsolete due to the ability of Shopee. Shopee was not funded by major players, but instead was funded by its gaming unit, Garena. This meant they had to be smart with execution and had to differentiate. The path Shopee took was one of hyper localisation. Lazada, run by Alibaba execs, attempted to apply the Chinese market playbook to SEA countries, an idea that backfired spectacularly. Shopee, on the other hand, while run by execs who were primarily from China, decided to appoint locals to run the respective markets. This resulted in familiarity for consumers, an important differentiating factor. Shopee has operated under constant threat and competition from the very beginning of their journey. Yet, it has managed to gain market share year after year. The newest of the list is TikTok Shop, a formidable competitor and one that comes in a very different form. It is estimated that TikTok Shop grew its market share from 4% in 2022 to 16% in 2023. In that same time, Shopee STILL grew its market share from 48% to 55%. Instead, the players who have lost market share have been the smaller players such as Lazada, Tokopedia, Bukalapak etc. 3. Free Fire: Return to Growth Free Fire is a free-to-play battle royale game developed and published by Sea Limited’s gaming division, Garena. It was released in Dec 2017 and was the most downloaded mobile game globally in 2019, 2021 and 2023. Per SensorTower, Free Fire was again the most downloaded mobile game globally in November 2024. Why is Free Fire so popular despite incumbents such as CODM and PUBG having a very similar profile? Free Fire focused on having low-spec requirements, targeting users from less developed countries who have cheaper phones that are unable to support games like CODM and PUBG. Free Fire took advantage of this and had a first-mover advantage which has so far proved to be a moat. In late 2021 to early 2021, a combination of two key factors led to a huge drop in revenues for Garena in the subsequent quarters. 1. Huge growth that was pulled forward as a result of COVID restrictions reverted to the mean, as many stopped playing Free Fire, opting to spend time in the real world again. 2. In February 2022, Garena faced a significant setback when the Indian government banned Free Fire, reportedly due to concerns over Sea's association with Tencent and heightened India-China geopolitical tensions. Garena saw a huge drop in revenues in the subsequent quarters, from a high of 729M QAUs in 3Q 2021 to an eventual low of 485.5M QAUs in 4Q 2022. This was a huge factor that led to the 90% stock price decrease in Sea Limited from $350 to $35. (More on this later) Fast forward to today, Garena has continued growing its user base, with bookings growing 24.3% YoY in Q3 2024 and management updating guidance, expecting Free Fire’s full year bookings to grow over 30% YoY. QAUs are now at 628.5M. While still below its ATH, it is important to note these numbers DO NOT yet reflect Free Fire India, which has been approved for relaunch, but has yet to launch. (More on this later too) The previously troubled segment of Sea’s business is now back to hyper-growth of 30%. It is also important to note that Garena is Sea’s most profitable segment by far, generating ~60% of the business’ adjusted EBITDA as of Q3 2024. 4. SeaMoney: Democratising Finance On to the last segment of Sea’s business, its latest business that has now out-grown Garena and continues to grow at a rapid pace. SeaMoney is a digital financial services business with a large mandate, providing a range of financial products and services to both individuals and businesses. Their services include mobile wallets, digital banking, payment processing, credit and insurtech. In Q3 2024, SeaMoney reported revenue of $615.7M, up 38% YoY and adjusted EBITDA of $187.9M, up 13.4% YoY. SeaMoney’s loan book grew over 70% YoY, adding 4M first-time borrowers. Active users for consumer and SME loans reached ~24M, growing more than 60% YoY. Despite its high growth, SeaMoney has always stayed prudent, with non-performing loans past due by more than 90 days ratio holding stable at 1.2%. Off-Shopee growth has also taken off. Use cases have expanded through facilitating large-ticket mobile phone purchases in retail stores. SeaMoney is generating the highest operating income of the 3 segments, with an operating income in Q3 2024 of 262.4M, an operating income margin of 52%(!) The major benefit that SeaMoney possesses is the flywheel effect that will be discussed later. A short excerpt from Sea President Chris Feng sums it well: “Our key driver of growth continues to be credit lending which is in high demand, but still very underserved in our market. Shopee's large user base in our market makes it highly efficient for us to acquire and serve credit users.” The thesis is extremely similar to $GRAB’s GFin business. Southeast Asia has a burgeoning young middle-class population of 600M people. Two-thirds are unbanked/underbanked. Rising digital adoption rates and mobile-first markets are embracing digital wallets and online financial services, with SeaMoney well-positioned to capitalise on this macro trend. SeaMoney, similar to Grab, has obtained a digital banking license in Singapore, one of only 4 entities to do so. Customer acquisition costs are low due to its integrated ecosystem. 5. Strong Economic Moats The 5 moats that I focus on are cost advantage, network effect, switching costs, intangible assets, and efficient scale. Cost Advantage: SeaMoney leverages Shopee and Garena’s existing user base, lowering customer acquisition costs. The shared infrastructure layer and data across the Sea ecosystem provides cost efficiencies. Network Effect: Shopee’s marketplace is the prime example of network effects in action; more buyers attract more sellers, and vice versa, enhancing platform value. Garena is similar, benefitting from multiplayer engagement that increases the stickiness of the platform. SeaMoney’s network effects amplify as users and merchants adopt its payment solutions, especially through integration with Shopee. Switching Costs: This is perhaps Sea’s weakest moat as Shopee has alternatives such as Lazada, Tokopedia and TikTok Shop. Garena has moderate switching costs in the form of players invested in Free Fire through in-game purchases and achievements. SeaMoney’s financial services, while innovative, are commonplace. Intangible Assets: Shopee has particularly strong brand recognition in Southeast Asia, with “Shopee” largely being a verb for online shopping. Being the first thing that comes to mind is of great advantage. Efficient Scale: Shopee has built scale in Southeast Asia, especially with the recent focus on SPX, its proprietary logistics service. At its current size, it is difficult to see how newer players will be able to overtake Shopee’s lead in terms of size due to massive economies of scale. In all, Sea Limited thrives on its network effects and ecosystem synergies, with its gaming and fintech businesses showcasing stronger moats than its e-commerce arm. Efficient scale is emerging as a more defensible moat over time, particularly in gaming and digital banking. 6. Robust Multi-Business Ecosystem While each of Sea’s business lines are great businesses by its own right, together they form the most complete conglomerate in Southeast Asia. The conglomerate model leverages interdependencies among these units, creating a self-sustaining ecosystem. Garena acts as the cash cow of the business with Free Fire generating substantial revenue and free cash flow for the continued reinvestment into Shopee and SeaMoney. Shopee is the growth engine of the business and the largest piece of the puzzle, dominating the SEA e-commerce landscape and setting itself up to benefit from the long tail of supernormal profits that is common for platform winners. SeaMoney leverages on Shopee’s huge customer base that allows for lower customer acquisition costs. The SeaMoney-Shopee ecosystem is extremely strong. SeaMoney’s digital wallet, ShopeePay, is integrated directly into the Shopee platform, allowing users to make quick and secure payments for their purchases on Shopee. SeaMoney also offers BNPL options on Shopee, allowing users to make purchases and pay for them in installments. This makes it easier for users to afford higher-value items and increases their purchasing power. SeaMoney provides microloans and credit services to Shopee users and small business owners. This is particularly useful for small business owners to fund operations on Shopee. The large amount of data that Shopee possesses allows them to tailor financial products and services to better meet the needs of users. By analysing transaction data from Shopee, SeaMoney can develop more accurate credit scoring models, allowing them to offer personalised credit products with appropriate risk assessments. 7. Regional Economic Tailwinds Southeast Asia is one of the fastest growing regions in the world with a young and burgeoning middle-class, a 600M population with a median age of just 32. Total GDP in the region is projected to reach $4.5T by 2030, potentially making it the world’s 4th largest economy. The digital economy is expected to hit $600B by 2030 with rising disposable incomes in the region projected to grow at 8-10% CAGR. SEA’s core sectors have made strides towards profitability too, with e-commerce EBITDA margins on a constant uptrend as platforms run more disciplined promotional and marketing campaigns, and introducing new value-added services. Yet, SEA as a region remains heavily underbanked and underserved. Sea Limited is in pole position to benefit from this, alongside Grab. As described by the leading SEA digital economy report published by Google, Temasek, and Bain, the 6 leading sectors in the digital economy are E-commerce, Food Delivery, Transport, Online Travel, Online Media, and Financial Services. Of these 6 sectors, Sea is a key player in 4: E-commerce (Market Leading ~50% share), Food Delivery (ShopeeFood, #3 player in SEA), Online Media (Leading Mobile Game in the world), Financial Services (Pioneering Digital Banking Player). 8. Financials & History As I alluded to in recent paragraphs, Sea Limited has been through extremely tough periods in its short history. In 2021, one of the shrewdest decisions by management was made, which could ultimately prove to be the single most important reason for the company’s survival after the collapse in Garena users and drop in Shopee growth rates. In Sep 2021, in the midst of Sea’s quite frankly insane stock price run-up from $37 in March 2020 to $370 in Oct 2021, Sea announced a combination of equity and convertible notes offering which raised $6.3B in fresh capital, the largest ever capital raising by a Southeast Asian company. The terms implied a convertible notes’ exercise price of US$477, while the stock price was at $330. The interest rate of this notes offering was just 0.25%. Shortly after, the interest rate hike by the FED, Garena user collapse, FF India ban, Shopee growth slowing, etc… led to a collapse in the stock price. With dilution no longer on the table, the $6.3B cash raised proved to be of utmost importance for the survival of the company. As I write this note, Sea Limited is now operating from its greatest position of strength in its history. Garena is growing bookings at ~30% YoY with Free Fire showing no signs of losing popularity, and with the possible growth catalyst of a FF India relaunch. Shopee has significantly improved on its profitability margin, turning adjusted EBITDA positive again, on track to deliver full-year guidance of mid-20s% YoY GMV growth. Shopee achieved positive adjusted EBITDA in Q3 2024 in both Asia markets and Brazil. Of particular note, further market-rationalisation in SEA drove industry-wide increases in commission take-rates with ad-paying sellers growing >10% YoY in 3Q 2024 and ad-paying revenue per seller rising >25% YoY in 3Q 2024. Ad take rate also improved by >30 bps YoY. SeaMoney’s loan book grew by over 70% YoY this quarter, hitting $4.6B. SeaMoney has grown to become a consistently profitable segment for Sea and will be a key factor in improving the overall business’ bottom-line margins. ---------------------------------------------------- BEAR THESES DEBUNKED (4 POINTS): 1. “E-Commerce is hyper-competitive, TikTok/Temu are coming for Shopee’s lunch” An extremely reasonable point, given the SEA E-commerce history. Yet, this has proven again and again to be a false narrative. As always, I prefer to look at the data. Despite the concerns of TikTok/Temu, Shopee has increased GAAP Take Rate from 11.7% to 12.7% YoY. This does not happen in a hyper-competitive environment. Firstly, addressing Temu. Temu is focused entirely on cross-border commerce, a segment that Shopee has extremely little focus on. This point was also addressed by Sea CFO Tony Hou during the Q2 2024 Earnings Call where he stated Sea’s comparative price advantage over Temu in SEA markets. Temu’s strength is in entering the US and European markets with better pricing. However, this is difficult in SEA as Shopee has established a very competitive seller landscape domestically for quite awhile. He explained: “And also compared to a more developed market where the operating cost is much higher compared to the operating cost in China, the operating cost for our sellers in our market domestically is probably cheaper than operating costs in China. If you take a person in the Philippines to open a warehouse or operate a shop, they are probably cheaper than a Chinese person.” Secondly, regarding TikTok Shop, their main competitive positioning has been a focus on live streaming and video-commerce which have been huge hits in SEA, as it has been in China for the past half a decade. Shopee has acknowledged their weakness in this area and has put additional focus on their content ecosystem in the past few quarters. In Q3 2024, average daily unique streamers and daily unique live streaming buyers grew > 50% and > 15% QoQ respectively, in 3Q 2024. Shopee also launched a successful collaboration with YouTube in Indonesia, Thailand and Vietnam, rivalling TikTok’s video-commerce. 2. “Garena only has Free Fire and Free Fire is a game in decline” Firstly, Free Fire has been a "one-hit wonder" for over seven years. Critics frequently highlight Garena's heavy reliance on Free Fire and question its ability to maintain relevance over time. To counter this, I would point to comparable franchise games that have sustained popularity despite similar criticisms. For example, FIFA, first released in 1993, remains highly popular today with minimal fundamental changes. Other examples include Grand Theft Auto, Call of Duty, NBA 2K, and Minecraft—all of which demonstrate the staying power of a well-established gaming franchise. Free Fire has consistently proven to be an evergreen franchise, with over 100 million daily active players today. For now, Garena’s reliance on Free Fire is justified—it remains an exceptionally successful product. Secondly, Garena operates a game publishing studio that regularly produces new titles. However, creating a hit game on the scale of Free Fire is an incredibly rare achievement in the gaming industry. Most publishers are fortunate to achieve one such success in their lifetime. To date, none of Garena’s other games have approached even a fraction of Free Fire’s scale. That said, there is potential in Garena Free City, an upcoming title resembling GTA V. The game offers features such as an open-world setting, PvP and PvE modes, stealth-focused missions, and multi-stage heists, which position it as a strong contender for success. It recently soft-launched in Argentina and currently ranks first in free downloads on the Google Play Store. This will be one to watch in the coming quarters. 3. “Asian stocks are uninvestable” Blanket statements about Asian stocks are extremely misguided. Till this day, there are many who confuse Sea Limited, a company headquartered in Singapore and primarily doing business in SEA for a Chinese company. Yes, Sea Limited’s executives were born in China, but they have lived in Singapore for the large majority of their adult lives. SEA is often grouped as a collective entity, but in reality, it is a highly diverse region and far from homogeneous. SEA governments generally exercise far less centralised power compared to the CCP, allowing for greater autonomy and entrepreneurial freedom. As a regional hub, Singapore offers a business-friendly environment with extremely transparent regulatory frameworks by global standards. Unlike China, SEA is not facing an existential population decline and a severe deceleration in GDP growth. Instead, SEA is one of the fastest growing regions in the world, with a digital economy that is expected to grow at double digit growth rates for at least a decade. 4. “Poor execution, they expanded too fast and failed in Europe.” This is a very valid point and one that was the cause of much concern in 2022. Shopee, off the back of its successful ventures in Latin America, decided to enter Europe. However, with Europe’s demographics being entirely different from that of SEA or LatAm, and the lack of logistics expertise, the venture ultimately failed. While the withdrawal was rightly seen as a failure by the market, this does not negate the value of the lessons learned, which can inform future market entries or product development. Shopee’s willingness to experiment is a positive in my eyes. Successful companies often experiment with new ideas, adapt based on feedback and refocus their efforts when necessary. Shopee’s swift exit from Europe is a prime example of this, with management’s willingness to make tough decisions and prioritise long-term goals over sunk costs. ---------------------------------------------------- REAL RISKS (3 POINTS): Frankly speaking, I found this to be the most difficult segment to write about. I have studied Sea Limited for nearly 5 years now and have come across countless bear arguments. At present, there do not appear to be any factors posing an existential threat to Sea Limited. However, if I have overlooked any critical aspects, I welcome your insights and corrections in the comments below. With that said, I have put on my bear cap and explored the possible challenges that Sea Limited could face. I would not go as far as to say these are bear thesis points. Rather, these are specific risks that I will be watching closely in coming quarters to ensure Sea remains on the right path. 1. Competition with TikTok Shop TikTok Shop poses a remarkably different challenge to Shopee. Shopee’s competition has largely been incumbents in the e-commerce space. TikTok Shop has approached the e-commerce element in a different format, focusing on leveraging short-form video content, influencer marketing, and in-app purchasing, allowing for a seamless and engaging shopping experience. TikTok has hundreds of millions of active users in SEA, giving TikTok Shop a ready-made audience and a significant advantage in user acquisition and engagement costs. However, Shopee’s platform does pose an interesting counter-position to TikTok Shop. Shopee optimises for diverse categories and deep search functionality, appealing to buyers who are further along the purchase journey. Users go onto Shopee with the sole purpose of shopping while TikTok users are generally using TikTok to consume entertaining short-form content. Shopee’s infrastructure network and vertically integrated supply chain ensures consistent fulfilment and delivery, allowing for economies of scale that TikTok Shop is simply unable to match at this point. I believe Shopee still has the upper-hand but TikTok Shop is certainly a formidable competitor that Shopee has to watch out for in the coming years. 2. Management’s lack of transparency with FF India Free Fire India is potentially a huge catalyst for Sea Limited as a whole. Let me break it down. India was Free Fire’s biggest market, by far. Of the top 100 FF streamers on YouTube in 2021, 31 were from India with a combined 128 million hours streamed. In January 2022, AppAnnie stated that of the 75M globally monthly active users, 40 million were from India. A Free Fire India relaunch would likely lead to FF growing bookings at well over 40% YoY, currently 30%. In September 2023, an announcement was made that Free Fire was unbanned and a planned relaunch was in the works. Fast forward to today, Free Fire has not relaunched in India yet and there has been no news from management over the past four earnings calls. The delayed relaunch could reflect a cautious approach due to the sensitivity of India-China relations, a significant geopolitical factor. This prudent strategy might help Sea Limited secure a sustainable presence in India while ensuring compliance with local regulations and addressing public sentiment. I would give Sea management the benefit of the doubt here but watch the coming quarters closely. 3. The need to balance growth and profitability Sea Limited has often struggled with this in the past. As interest rates spiked and investors demanded profitability, Sea Limited aimed to strike a balance between growth and profitability. This has led to fluctuations in growth rates, leaving many investors spooked and confused about management’s plans. However, Sea Limited does operate from its greatest position of strength at the moment, with Shopee being EBITDA positive for the first-time in a year while growing at ~25% YoY, a very healthy balance. I have confidence that Shopee’s management has learned a great deal from the past quarters and knows the right levers to pull and release to ensure a balance is struck between growth and profitability.

@PvnksOfficial yaup...feels about right lol

@9Teeder Sir

aaannddd we're picking up where we left off - how's everyone been holding up?? lol

it's wild cus I was hibernating for about 6 months...and yet the launches I'm seeing all look the same as when I left...have we not evolved yet? show me something new folks. show me something innovative. isn't that what we're trying to do here?

some might ask.....is he simply back to pump the bag? and some might realize - he was never about that life...he simply seeks the vibes 🤙

wanna know something fun?? still holding all my lovely @PvnksOfficial & @tinydinosnft cus why would I not be?? ;) #nfts #pvnks #repeatoffenders #tinydinos #rawr

@sexadegen Ah yes, the future of memes lol

For the culture.

@Lovey1973 Love it! I’m a fan of a solid industrial REIT - $DIR.UN is another one with a great dividend at a lower stock price than Granite, been looking hard at them too 👀 I like how they’ve built globally

@9Teeder Granite has been on my watchlist a long time! I'm always trying to stack more bricks 🧱 to my NWH position!

My Canadian crew. What is your favourite REIT not named RioCan?

@PvnksOfficial 👀👀

🔵🟢🟡🔴 🟡🟣🔵🟣 🟢🔴🟡🟢 🟡🔵🟣🔴 T minus 24 hours

@tinydinosnft Gm #rawr

gm say it back or dino attack! 🔪

Hey @feetpixswtf - this you? 😂 #Mainstream wsj.com/articles/a-sub…

@PvnksOfficial 🌭 we like the dogs 🤙🏻

🌭

sorry, 2004* my bad, my bad 😅 youtube.com/watch?v=3HpIZr…

…and somewhere out there @willsmith’s lacing up his Chuck Taylor’s (vintage 2001) gettin ready to save the world (again)…

Do I appreciate the vibes? Absolutely. They're immaculate and should be applauded. Am I taking $69 for a 6D Palindrome? I think not lol 810018.eth 🤙 (listed at 0.35 if you're wondering) #ens #palindromes

@0xNitro inevitably, yes. 1000%

Is there demand for Omnichain NFT infrastructure?

@bubblesnfts Sounds right to me 🤙🏻

I got more crypto than cash, am I doing it right?

@anthony_j_zhang 🇨🇦🍷🤙🏻

Wine investing isn’t a fad. It’s a global phenomenon. Vinovest has clients in more than 40 countries including: 🇦🇱 🇦🇺 🇧🇭 🇧🇪 🇨🇦 🇨🇳 🇨🇾 🇩🇰 🇪🇨 🇫🇷 🇩🇪 🇬🇷 🇬🇹 🇭🇰 🇮🇳 🇮🇩 🇮🇪 🇮🇹 🇯🇵 🇯🇴 🇱🇻 🇱🇺 🇲🇴 🇲🇾 🇲🇽 🇳🇱 🇳🇿 🇵🇦 🇵🇭 🇵🇹 🇷🇺 🇸🇦 🇸🇬 🇸🇮 🇰🇷 🇪🇸 🇰🇳 🇨🇭 🇹🇭 🇹🇷 🇦🇪 🇬🇧 🇺🇸 🇺🇦

#NewProfilePic (but #oldprofilepic) back to my regular tinted #pvnk 🤙🏻 still vibing from seeing all the #repeatoffenders on my feed yesterday for the collection’s anniversary - what a thing you’ve built @TheGerhard & @PvnksOfficial, cheers to you 🍻 #pvnkforever