Analysts said Shopee will face "increased pressure" from Tokopedia and TikTok's cooperation in Indonesia.

Just on Monday, GoTo and TikTok announced a "mutually beneficial strategic partnership" in Indonesia to serve micro, small and medium-sized enterprises, which make up more than 90% of the country's merchants.

"We believe the deal could also put more pressure on Shopee as it also struggles to maintain profitability," senior equity analyst Wang Kai said in a note on Monday.

U.S.-listed shares of Shopee parent company Sea closed down 5.33% at $37.87 after the partnership announcement.

Jianggan Li from Momentum Works said the GoTo-TikTok deal was a "masterstroke." "TikTok Shop will gain full operational control, legality to operate e-commerce and some useful local allies," he said in an analysis on Monday.

"Shopee cannot beat TikTok Shop head-on by relying solely on e-commerce products, operations and revenue. Shopee needs a very clear strategy to win this game, and the key to winning may not lie in e-commerce," Li said.

"Given that live-streaming e-commerce on social media platforms such as TikTok has recently grown faster than traditional e-commerce platforms, we believe Sea may increase operating expenses," Wang Kai said, adding that this could lead to "profits from live-streaming e-commerce." rate dropped”.

It's also worth noting that GoTo stock also fell about 20% on Monday as it relinquished control of Tokopedia.