PDD Holdings Inc’s (拼多多) shares fell the most on record after Temu’s owner warned that revenue growth would inevitably dwindle, highlighting the challenges of sustaining its pace of expansion against aggressive rivals like ByteDance Ltd (字節跳動).
Cofounder Chen Lei (陳磊) repeatedly stressed that PDD’s current trajectory was not sustainable, at a time competitors such as ByteDance’s TikTok and Alibaba Group Holding Ltd (阿里巴巴) are vying for budget-conscious shoppers.
PDD’s American depositary receipts on Monday tumbled 29 percent in New York, the stock’s worst loss since its initial public offering in 2018 and wiping out US$55 billion of market value.
Photo: Bloomberg
PDD has spent big on e-commerce business Temu to drive its global presence and escape an ailing Chinese economy.
However, executives have kept a lid on the overseas unit’s performance as competition turns cutthroat.
On Monday, Chen said PDD needed to invest more in supporting merchants — at a time rivals are trying to woo them away.
“Competition is here to stay and is expected to intensify in our industry,” Chen told analysts during a post-results briefing. “High revenue growth is not sustainable, and a downward trend in profitability is inevitable.”
The Chinese e-commerce platform, which became a market darling with low-priced goods that helped propel sales and profits during China’s economic downturn, reported revenue of 97.1 billion yuan (US$13.6 billion) for the April-to-June quarter, missing the average estimate of 100 billion yuan.
Its net income was 32 billion yuan, compared with a projected 27.5 billion yuan.
“Going forward, PDD will face fierce competition in China, with merchants going through a hard time,” said Wang Xiaoyan (王曉燕), a Shanghai-based analyst with 86Research.
“PDD will likely invest more in China, and that means we’ll see downside for the group in the Chinese market,” Wang said.
The company’s disappointing results were the latest in a series of red flags about the Chinese economy. This week, popular restaurant chain Din Tai Fung (鼎泰豐) said it was shutting 14 outlets in northern China. Last month, Starbucks Corp disclosed a 14 percent plunge in Chinese revenue in the June quarter.
“The big issue is weakness in China consumer,” Robeco Hong Kong Ltd’s head of Asia Pacific equities Joshua Crabb said. “The read-across for competition and a weak consumer will be negative for sure.”
Consumption, a main driver of the economy, weakened this year after a rebound in post-COVID-19 reopening spending last year. Against the backdrop of widespread job and salary cuts, as well as plunging property prices, Chinese consumers have become more cautious with their spending, leading to intense price wars in sectors such as cars.
Retail sales expanded just a little more than 3 percent in the first seven months of this year, far worse than the 8 percent-plus growth recorded in pre-pandemic times.
Residents’ confidence in future income plunged to the worst level since the end of 2022, a central bank survey conducted in the second quarter showed.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in server chips, expects revenue to decline this year due to sagging demand for 5-nanometer artificial intelligence (AI) chips from a North America-based major customer, a company executive said yesterday. That would be the first contraction in revenue for Alchip as it has been enjoying strong revenue growth over the past few years, benefiting from cloud-service providers’ moves to reduce dependence on Nvidia Corp’s expensive AI chips by building their own AI accelerator by outsourcing chip design. The 5-nanometer chip was supposed to be a new growth engine as the lifecycle
RSS