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Takeaways from the Key Notes
- PDD Holdings shares, which are traded in the United States, plunged on Thursday after its parent company Temu posted quarterly earnings that were vastly below analyst expectations.
- Competition and a costly expansion have been cutting into PDD's earnings.
- PDD shares are down nearly 30% this year.
PDD Holdings’ (PDD) shares traded in the United States plunged during intraday trading on Thursday, after the parent company of Temu Discount Marketplace posted quarterly results that were far below analysts’ expectations as the competition continued to eat away at its operations.
Visible Alpha’s consensus estimate of 101.6 billion Yuan was surpassed by 44.3%. Earnings per share (EPS), which were 4.23 yuan in the third quarter, also fell short of expectations of 4.46.
“Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges,” In a press release, PDD Vice-President of Finance Jun Liu stated.
Amazon launched a new section last week to compete with Temu and Shein
Temu has quickly grown to become a major competitor for ecommerce giant Amazon, as well as Chinese rivals Alibaba and JD.com. Its costly international expansion has hurt its profitability. Meanwhile, rivals like Amazon are battling back. Last week, Amazon launched a section of its app that focuses on items priced at $20 or less in order to compete with Chinese platforms and others like Shein.
Liu warned, in August, after the company reported sales below estimates, that future revenue growth would be pressured as the competition intensifies.
PDD's U.S. traded shares fell almost 10% Thursday and are down around 30% this year.
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