Temu’s Parent Company PDD Misses Revenue and Profit Estimates Amid Weak Consumer Spending

The company’s stock dropped 10% in pre-market trading, following a similar decline in August after a disappointing Q2 earnings report.

PDD Holdings' third-quarter financial report, released on Thursday, revealed that both revenue and profit were below market expectations. Despite promotional offers and discounts, Chinese consumers were not persuaded to spend as anticipated, causing slower-than-expected sales growth on its e-commerce platforms.

PDD’s shares fell 8% in pre-market trading.

Higher youth unemployment and a property crisis in China have dampened consumer confidence, further weakening sales for Pinduoduo, PDD’s domestic e-commerce platform.

At the same time, rivals Alibaba and JD.com also reported weak sales growth for their respective September quarters.

Although Pinduoduo benefited from its low-cost strategy, it now faces intense competition, with rivals ramping up their own discounts and promotions, leading to a price war.

Jun Liu, PDD Holdings' VP of Finance, commented, “Our top-line growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges.”

PDD reported Q3 revenue of 99.35 billion yuan (approximately $13.72 billion), a 44% year-on-year increase. However, this figure was below the 102.65 billion yuan average estimate of 17 analysts surveyed.

Net income rose to 24.98 billion yuan, up from 15.54 billion yuan in the same period a year earlier. However, the company’s adjusted EPS of 18.59 yuan fell short of the 19.79 yuan forecast.

In August, after a disappointing second-quarter report and a downbeat outlook from executives, PDD’s shares suffered their biggest single-day drop since its 2018 listing, losing nearly $55 billion in market capitalization.

In conclusion, PDD Holdings’ third-quarter results missed market expectations due to weak consumer spending in China. While revenue grew by 44% year-on-year to 99.35 billion yuan and net income rose to 24.98 billion yuan, adjusted EPS of 18.59 yuan came in below analyst expectations of 19.79 yuan. Despite benefiting from its low-price strategy, Pinduoduo faces mounting competition, intensifying the price war with rivals. As a result, PDD’s stock dropped 8% in pre-market trading, continuing the downtrend seen after the disappointing second-quarter earnings report.

Currently, PDD’s stock is down more than 10% in pre-market trading, with the next support level at 88.01. If this support is breached, the downward trend may continue. What’s your take on the outlook? Leave your comments below!