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Stock of the Day: Temu parent PDD falls 5% as revenue misses estimates and growth slows
The move: US-listed shares of PDD Holdings sank 5% in premarket trading Thursday. The company's American depository receipts are up 33.4% for the year.
The chart:
Why: The Chinese e-commerce firm, which owns the popular online marketplace Temu, disappointed investors with underwhelming quarterly revenue, suggesting lackluster demand and rising trade difficulties.
Revenue reached 110.61 billion yuan in the December quarter, missing consensus expectations of 115.38 billion yuan. The quarter marked the slowest revenue growth since 2022.
Investors grew confident in a better outcome as China's government focused on policies to boost domestic spending. The country's economy is increasingly looking to consumers to offset growth headwinds from US tariffs, though demand remains low since the country has struggled to recover after the pandemic.
PDD also faces strong competition from local peers Alibaba and JD.com, which both beat earnings estimates in recent weeks.
What it means: PDD's drop on its latest earnings report points to the risk of US protectionism on foreign firms' profits. The firm is the parent company of Temu, an e-commerce company that's grown popular for its ultra-low costs and which has muslced into competitors' territory in recent years. This week, US retailer Forever 21 announced it would close all locations, blaming discount sites like Temu and Shein for its demise.
But Temu's success is increasingly challenged. In the US, Temu's surge was helped by a trade exemption known as the "de minimis policy," which spares cheaper imports from tariffs. But as the Trump administration began seeking changes to this rule, February data shows a slowdown in Temu sales .
Read the original article on Business Insider