Temu-owner PDD tops quarterly revenue estimates, margin squeeze continues
PDD reported revenue of US$14.53 billion during the second quarter ended June, up 7 per cent from a year earlier
E-commerce firm PDD Holdings, which operates low-cost platforms Pinduoduo in China and Temu internationally, easily beat market estimates for quarterly revenue on Monday, although net profit fell due to investments to ward off intensifying competition.
US-listed shares of the company jumped nearly 12 per cent in premarket trading, buoyed by adjusted earnings per ADS of 22.07 yuan, which exceeded estimates of 15.74 yuan.
The Chinese government has been seeking to boost domestic consumption to revive a sluggish economy that is navigating several pressures, including a weak property sector and US President Donald Trump’s trade policies.
To lure customers, e-commerce majors such as PDD’s Pinduoduo, JD.com and Alibaba Group Holding have resorted to steep discounts and promotional offers. While that has helped prop up demand, it has also sparked a price war between the companies.
Alibaba owns the South China Morning Post.
The need to keep prices low in China, combined with US tariffs driving up its costs tied to international shipping and sales, has hit PDD’s margins in recent quarters.
Second-quarter earnings showed PDD has increased fulfilment fees, bandwidth and server costs and payment processing fees, as well as sales and marketing expenses.