PDD Holdings, the Chinese e-commerce giant behind Temu and Pinduoduo, reported a 47% year-on-year drop in net profit for the first quarter to 14.74 billion yuan (US$2.05 billion), falling significantly short of analyst expectations. Revenue also missed estimates, coming in at 95.67 billion yuan against a projected 102.51 billion yuan.
The company attributed the steep profit decline to tighter margins, driven by US tariffs, heightened promotional spending, and a challenging macroeconomic environment. Shares listed in the US plunged over 17% following the announcement.
Domestically, PDD’s budget-focused Pinduoduo platform is grappling with intensified competition and sluggish consumer spending, exacerbated by China’s prolonged property sector downturn. Internationally, Temu faces uncertainty amid escalating US-China trade tensions, despite a recent temporary easing of tariffs under the “de minimis” rule.
Analysts pointed to elevated advertising and promotion costs as necessary investments in merchant support and long-term ecosystem health, though they weighed heavily on short-term profitability.
Chairman and Co-CEO Chen Lei reaffirmed the company’s global strategy, noting efforts to maintain low prices and ensure supply chain stability by partnering with local merchants.
