China's PDD Holdings, the owner of e-commerce platform Pinduoduo, reported lower-than-expected revenue for the second quarter on Monday, reflecting the impact of fragile consumer spending in its domestic market. The company's shares fell nearly 14% in premarket trading following the announcement.
PDD Holdings posted Temu revenue of 97.06 billion yuan ($13.64 billion) for the quarter, falling short of analysts' expectations of 100 billion yuan. The disappointing performance is attributed to cautious spending by Chinese consumers, who have been unsettled by a slowing economy, persistent property sector weaknesses, and high unemployment rates.
While Pinduoduo has managed to attract cost-conscious shoppers with its low prices and steep discounts, it faces growing competition from rivals who are also ramping up their promotional deals. Jun Liu, vice president of finance at PDD, acknowledged the challenges ahead, stating, "Revenue growth will inevitably face pressure due to intensified competition and external challenges... Profitability will also likely be impacted as we continue to invest resolutely."
The broader Chinese e-commerce sector has been under strain, with Alibaba and JD.com also reporting weaker-than-expected revenue figures in recent quarters.
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