PDD Holdings, the Chinese owner of online shopping platforms Temu and Pinduoduo, reported disappointing sales and profit as Chinese consumers continued to hold back amid the economic slowdown.
US-listed shares of the e-commerce giant fell almost 11% on Thursday after the announcement.
It comes after its main rivals in its home market, Alibaba and JD.com, also posted underwhelming results in the September quarter.
Consumer confidence has been dented amid a crisis in the country’s property sector and high levels of youth unemployment.
Revenue at PDD in the three months to September came in at 99.35bn yuan ($13.7bn, £10.9bn), against analyst forecasts of about 102.8bn yuan.
It marks the second quarter in a row that PDD misses estimates after years of rapid expansion.
Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges,” said Jun Liu, VP of Finance of PDD Holdings.
Though PDD’s Chinese e-commerce platform, Pinduoduo, has gained popularity due to its concentration on low-priced and heavily discounted items, a growing number of competitors started to adopt similar strategies that triggered a price war.
China’s retail sector is facing headwinds from the broader economic slowdown, while consumer confidence has yet to fully recover, ” said James Yang, a partner in retail and consumer products at management consulting firm, Bain & Company.
“Looking ahead, e-commerce growth is expected to continue… albeit at a slower pace.”
Meanwhile, PPD’s hot global e-commerce platform, Temu, also has its problems overseas.
“There’s uncertainty to potential tariff change and increasing pushback from more countries related to its ‘cheap’ prices,” said Alicia Yap, an equity research analyst at Citi, before the results were announced.
Last week, Vietnamese authorities said Temu and Shein needed to register with the government before the end of the month or face a ban.
In October, Indonesia ordered Google and Apple to remove Temu from their app stores in a move 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 that could lead to steep fines.
Whereas the US President-elect Donald Trump has pledged to hike tariffs on imports from China, which may take away Temu’s competitive advantage as some of its super-cheap products’ prices may shoot upwards.
Hello, my name is Alfie and I live on the Isle of Wight. I love Cricket, Snooker, Mountain Biking, Goalkeeping, Art, Golf, and Film Making!
