MercadoLibre (MELI -0.45%) and Sea Limited (SE -0.69%) both operate in the e-commerce and fintech industries, but how do they stack up against each other? In this segment from "The Future of Fintech" on Motley Fool Live, recorded on Feb. 24, Fool.com contributors Matt Frankel, Jason Hall, and Danny Vena answer a member's question about their similarities and differences.
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Matt Frankel: Can you compare/contrast Mercado Libre with Sea Limited? I don't know if either of you own Sea Limited.
Jason Hall: No, I don't.
Frankel: I actually recently added it to my portfolio. I always talk about my pandemic buys from 2020. I consider this my 2022 dropped buy. I think they're different businesses. I think Sea Limited has the gaming platform, which is its core business. I think it has a lot of e-commerce potential. I don't think it's going to dominate the Latin American market, which I know it moved into recently. But its market share there is still relatively small. It's a single-digit percentage compared to MercadoLibre, which is literally like the Amazon (AMZN -1.65%) of Latin America in terms of market share.
I love the potential in Southeast Asia. I really don't care what they do with Latin America, to be honest with you, I'm buying it for the potential in Asia. I like the SeaMoney platform. I think they have a lot of e-commerce and fintech potential. I love that they have the core gaming business to generate some revenue. In the meantime, while they're growing those. Guys?
Hall: I think it's important to remember too and in these cases, you think about Sea Limited, right and it gets brought in here because of going to what is the name of their payment platform? Sandler.
Danny Vena: SeaMoney?
Hall: Sometimes in a lot of our best investments and favorite investments they operate in areas where we see one huge winner. Netflix (NFLX 1.74%) is a good example. It's been a massive, massive winner. It's been the winner in terms of investment in an econ or in streaming. There's other companies that have had some play in it, but they haven't been the winner because of streaming. We see a lot of that.
I think in something like payments though. I mean, we're talking about trillions of dollars being moved around, even in Latin America, and that number is going to continue to grow. I think sometimes we look for the one horse to ride. I don't think when we're talking about something like payments, that's going to be the case.
I think there's going to be a lot of winners. I'd want to make sure to say that because I think MercadoLibre is going to be a huge one because of payments and e-commerce, and Sea Limited payments is going to be one of the reasons it's a winner. But I don't think that's going to necessarily keep MercadoLibre from also continuing to grow very fast in Latin America because of that.
Vena: I mean, there are some obvious similarities and I think that's the ecosystem idea where Mercado Libre began as an e-commerce platform and then added payments and has gradually over time expanded into other areas. I think that's something that Sea Limited has done that mirrors what MercadoLibre did.
But they've started as Matt pointed out with their gaming, and they have one hit game, Free Fire. What they have done then they added this payments capability for their users and then expanded into e-commerce.
One of the things I wanted to point out is, and this was something that Federico Sandler, the head of MercadoLibre's Investor Relations at the time pointed out to us and that was the fact that Sea Limited's e-commerce platform actually sells far fewer items and much lower-cost items on a lot of those had to do the things like electronics or phone cases or wires or connectors or things of that nature. Not really the broad offerings that you'd expect on a lot of e-commerce platforms.
Obviously, a lot of opportunity to expand beyond that. I am a Sea Limited shareholder because I see the same opportunity that you two do. But I don't think right now it has the same potential as MercadoLibre, although I believe it could grow to that potential in the future.
