PDD Holdings misses revenue estimates as profit falls 12%

PDD Holdings ↘ 2.36%, the parent company of discount shopping platforms Temu and Pinduoduo, reported second-quarter revenue that fell short of Wall Street expectations on Monday, as fierce price competition in China and mounting trade barriers abroad squeezed growth and dragged profits lower.

The company posted revenue of 112.36 billion yuan ($16.6 billion) for the three months ended June 30, an 8 percent increase from the same period a year earlier but below the 116.35 billion yuan analysts had expected, according to LSEG data. Net income attributable to ordinary shareholders fell 12 percent year-over-year to 27.2 billion yuan.thestandard+3

Domestic Price War Intensifies

The revenue miss underscores the toll that China's bruising e-commerce price war is taking on even its most aggressive discounters. PDD's Pinduoduo platform competes against Alibaba's ↗ 1.60% Taobao and Tmall, JD.com ↘ 0.97%, and ByteDance-owned Douyin through subsidies and incentives aimed at winning over cost-conscious consumers. But weak consumer confidence, job security concerns, and a prolonged property downturn have kept shoppers cautious, limiting spending even during this year's "618" shopping festival, one of China's largest online sales events.bnnbloomberg+1

Total operating expenses rose 13 percent to 36.6 billion yuan, outpacing revenue growth, as PDD increased investment in logistics, merchant support programs, and sales and marketing. Research and development spending climbed to 4.6 billion yuan from 3.6 billion yuan a year earlier.stocktitan

Tariffs and Regulations Hit Temu Abroad

Overseas, Temu faces an increasingly hostile regulatory environment. U.S. tariffs on Chinese imports and the end of duty-free treatment for low-value parcels have forced some merchants to raise prices, threatening the platform's core appeal to bargain-hunting consumers. In Europe, a newly instituted fee on small parcels imported directly from China is set to further raise costs for sellers and consumers.thestandard

"Since the start of the year, global trade and regulatory landscapes have continued to evolve, creating significant challenges while also presenting new opportunities," Co-CEO Lei Chen said in the company's earnings release.stocktitan

Building "Another PDD"

Despite the near-term headwinds, PDD's leadership reiterated an ambitious three-year strategy first outlined earlier this year to "build another Pinduoduo" through supply chain investments and a new first-party brand business. The initiative, which includes a dedicated subsidiary launched in March with an initial 15 billion yuan cash injection, aims to reshape how products are manufactured and distributed rather than simply selling more goods online. Shares rose in volatile premarket trading in New York on Monday.finance.yahoo+5