Temu sales growth is slowing down
At first glance, PDD Holdings, the parent company of Temu and Pinduoduo, seems to have nothing to worry about. Its second-quarter revenue of 97.06 billion yuan (12.2 billion euros) was up almost 86 percent, while net profits almost tripled to 32.01 billion yuan (4 billion euros). But those numbers were lower than analysts had expected.
PDD’s operating expenses rose 48% in the three months ended June 30 as the company invested in marketing, advertising and promotions to attract customers.
General and administrative expenses more than tripled during the period to 1.84 billion yuan due to personnel-related expenses.
Read more
The owner of Temu became No. 1. Poles also had their share in this
What’s more, there’s a worrying trend emerging: CFO Jun Liu says the slower pace of growth is no coincidence, and he expects revenue growth to come under pressure from rising competition. “Continued investment will likely weigh on profitability,” he said.
The disappointing data did not please investors, and PDD Holdings' share price fell by almost 30%.
– This biggest single-day decline in PDD shares since the company's U.S. listing in 2018 resulted in a loss of market capitalization of almost $55 billion – Reuters reported.
Aggressive competition – a new problem Ago
This is facing headwinds both in China and abroad, as Walmart joins aggressive competitors (including Alibaba, Amazon, JD.com and Shein): the US giant recently sold its stake in JD.com to expand its Chinese operations on its own.
Read more
American hypermarket giant changes tactics
The company also fears the effects of stricter regulations. For example, the European Commission wants to eliminate customs exemptions for e-commerce shipments worth less than €150 sent from outside the European Union. The Chinese online store is also regularly under scrutiny for allegations of unfair competition and questionable product safety, quality and durability.
