PDD Holdings, the Chinese language proprietor of on-line procuring platforms Temu and Pinduoduo, has reported disappointing gross sales and revenue as Chinese language customers continued to carry again amid an financial slowdown.
US-listed shares of the e-commerce large fell practically 11% on Thursday following the announcement.
It comes after PDD’s important rivals in its residence market, Alibaba and JD.com, additionally posted underwhelming ends in the September quarter.
Shopper confidence in China has taken a success from a disaster within the nation’s property sector and excessive ranges of youth unemployment.
Within the quarter that resulted in September, PDD’s income reached 99.35bn yuan ($13.7bn, £10.9bn), under analyst forecasts of round 102.8bn yuan.
It’s the second quarter in a row that PDD misses analyst estimates, after years of quick progress.
“Our topline progress additional moderated quarter-on-quarter amid intensified competitors and ongoing exterior challenges,” stated Jun Liu, VP of Finance of PDD Holdings.
Whereas PDD’s Chinese language e-commerce platform, Pinduoduo, has grow to be well-liked due to its deal with low-cost and closely discounted merchandise, a rising variety of rivals have been adopting comparable methods, triggering a worth warfare.
“China’s retail sector is grappling with headwinds from the broader financial slowdown, with shopper confidence but to completely get well, ” stated James Yang, a associate in retail and shopper merchandise at administration consulting agency, Bain & Firm.
“Wanting forward, e-commerce progress is predicted to proceed… albeit at a slower tempo.”
In the meantime, PPD’s thriving international e-commerce platform, Temu, can be dealing with issues abroad.
“There’s uncertainty on potential tariff change and growing pushback from extra international locations associated to its ‘low-cost’ costs,” stated Alicia Yap, an fairness analysis analyst at Citi, earlier than the outcomes have been introduced.
Final week, Vietnamese authorities stated Temu and Shein wanted to register with the federal government earlier than the tip of the month or face a ban.
In October, Indonesia ordered Google and Apple to take away Temu from their app shops in a bid to guard the nation’s personal retailers.
The EU has additionally launched an investigation into whether or not the Chinese language e-commerce platform facilitated the sale of unlawful merchandise that might result in steep fines.
And, within the US, President-elect Donald Trump has vowed to boost tariffs on imports of Chinese language items, doubtlessly eradicating Temu’s aggressive benefit by driving up costs of its super-cheap merchandise.
