PDD Holdings’ Shares Decline Amid Sales Miss and China’s Economic Slowdown

PDD Holdings, the Chinese owner of the online shopping platforms Temu and Pinduoduo, has reported disappointing sales and profit figures. This performance comes as Chinese consumers continue to curb spending amidst an economic slowdown. Following this announcement, the e-commerce giant’s US-listed shares dropped by nearly 11% on Thursday. This situation follows similar underwhelming results posted by PDD’s main competitors in its home market, Alibaba and JD.com, during the September quarter. Consumer confidence in China has been negatively impacted by a crisis within the country’s property sector and high levels of youth unemployment. For the quarter that concluded in September, PDD’s revenue reached 99.35 billion yuan ($13.7 billion, £10.9 billion). This amount was below analyst forecasts, which were approximately 102.8 billion yuan. This marks the second consecutive quarter that PDD has failed to meet analyst estimates, after experiencing years of rapid growth. Jun Liu, VP of Finance of PDD Holdings, stated, “Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges.” PDD’s Chinese e-commerce platform, Pinduoduo, has gained popularity due to its focus on low-cost and heavily discounted products. However, an increasing number of rivals have begun adopting similar strategies, initiating a price war. James Yang, a partner in retail and consumer products at the management consulting firm Bain & Company, commented, “China’s retail sector is grappling with headwinds from the broader economic slowdown, with consumer confidence yet to fully recover. Looking ahead, e-commerce growth is expected to continue… albeit at a slower pace.” Meanwhile, Temu, PDD’s thriving global e-commerce platform, is also encountering difficulties overseas. Before the results were announced, Alicia Yap, an equity research analyst at Citi, noted, “There’s uncertainty on potential tariff change and increasing pushback from more countries related to its ‘cheap’ prices.” Last week, Vietnamese authorities announced that Temu and Shein must register with the government before the end of the month or face a ban. In October, Indonesia instructed Google and Apple to remove Temu from their app stores in an effort to protect the country’s own retailers. The EU has also launched an investigation into whether the Chinese e-commerce platform facilitated the sale of illegal products, a probe that could lead to steep fines. And, in the US, President-elect Donald Trump has pledged to raise tariffs on imports of Chinese goods. This could potentially eliminate Temu’s competitive advantage by increasing the prices of its super-cheap products.