Sea (SE) reported "strong" Q3 performance, with record gross merchandise value, as investments in logistics and fulfillment supported market leadership but weighed on near-term margins, Wedbush Securities said in a research note Tuesday.

The brokerage noted that the company's quarterly gross merchandise value reached $32.2 billion, with revenue of $4.3 billion, supported by a 6.7% year-on-year increase in active buyers and higher purchase frequency.

The firm now expects Q4 consolidated revenue of $6.4 billion, up 5% from its previous estimate. Consolidated adjusted EBITDA for the quarter is projected at $868 million, reflecting higher near-term investments in logistics and fulfillment.

For the full year, Wedbush forecasts total revenue of $22.5 billion, up 3% from its prior model, while estimating adjusted EBITDA to fall about 3% to $3.5 billion.

"Our intermediate-term margin trajectory contracts as we contemplate a longer investment period to drive more sustainable growth within the company's key competitive markets," according to the note.

Wedbush lowered its price target to $190 from $200 and maintained its outperform rating.

Shares of Sea were down nearly 9% in recent trading.

Price: 141.36, Change: -13.69, Percent Change: -8.83