PDD Holdings, Temu's parent company, reported better-than-expected quarterly results on Tuesday, with adjusted earnings of 21.08 yuan per share compared to 16.84 yuan expected. This performance is based on an aggressive discount strategy and heavy marketing spending. However, revenue grew by only 9% year-on-year to 108.28bn yuan, confirming a slowdown in growth. Despite these solid results, the group's share price fell by nearly 6% during trading, reflecting persistent concerns about the outlook.
Against a backdrop of fragile consumption in China, marked by employment tensions and a prolonged real estate crisis, platforms such as PDD, JD.com, and Alibaba have stepped up promotional campaigns to support demand. While Singles' Day enabled Pinduoduo to post an 11.7% increase in sales, the event has lost momentum overall, with sales spread over several weeks. PDD's management acknowledges that future results may fluctuate due to ongoing investments in merchant support and platform improvements.
Internationally, PDD faces an increasingly restrictive regulatory environment. Temu is exposed to the end of customs exemptions for small parcels in the United States and similar restrictions being considered by the European Union. In France, the platform has been criticized for selling non-compliant products. The group anticipates growing challenges related to changes in global trade rules. Despite adjusted net income rising to 31.38 billion yuan, PDD remains cautious, focusing on constantly adapting its model in a context of increased competition and persistent economic uncertainty.
