Shares in Temu parent PDD dive after disappointing outlook, result
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The news: PDD Holdings, the Chinese e-commerce giant and parent of Temu, saw its shares tumble over 31% to USD96.24 each on Monday in New York.
The numbers: The drop followed a disappointing quarterly sales result and outlook, with revenue reaching 97.06 billion yuan ($20 billion), below analysts’ forecast of 100 billion yuan, according to LSEG data.
The company also warned potential profitability declines were on the table as it planned investments to support a “sustainable ecosystem.”
Net income surged 144% to 32 billion yuan, but the company said “revenue growth will inevitably face pressure due to intensified competition and external challenges.”
The context: Merchants are protesting PDD's fines and accuse Temu – which is also facing regulatory scrutiny in the US, Europe and other jurisdictions – of withholding sales revenue.
Over 100 merchants gathered at Temu's Guangzhou office on Monday.
Temu and Chinese rival Shein are both grappling with regulatory challenges as they expand into international markets, facing scrutiny over issues like forced labour, product safety, and privacy breaches.
PDD said it will reduce transaction fees by 10 billion yuan next year to support “high-quality” merchants while vowing to “tackle low-quality” ones.
PDD does not plan any buybacks or dividends, and its shares have been under pressure amid broader market declines for Chinese stocks.
What they said: “While encouraged by the solid progress we made in the past few quarters, we see many challenges ahead,” Lei Chen, Temu’s chair and co-CEO said.
“We are committed to transitioning toward high-quality development and fostering sustainable ecosystem. We will invest heavily in the platform’s trust and safety, support high-quality merchants, and relentlessly improve the merchant ecosystem. We are prepared to accept short-term sacrifices and potential decline in profitability.”
The sources: PDD release , Nikkei
