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China's PDD misses quarterly revenue estimates on softer demand

PDD Holdings, the Chinese ecommerce giant, missed Wednesday's market expectations?for its quarterly revenue, as persistent economic weakness slowed demand for?the company’s domestic discount marketplace, Pinduoduo.

In premarket trading in the United States, shares of the company that operates Temu, an international e-commerce platform, dropped more than 5%.

Chinese retailers are struggling to attract customers as the prolonged property crisis and worries about wage growth and jobs have reduced consumer spending power. This has impacted demand for companies like PDD.

PDD faces stiff competition from JD.com, Alibaba and other rivals who are offering steep discounts and promotions to attract customers.

Temu has emerged as a popular platform for consumers to purchase everything from homeware to shoes at affordable prices. This is capturing the demand of lower-income households worldwide.

Temu's model of delivering cheap goods directly to customers from China, while generating strong growth in some markets, is facing increasing regulatory scrutiny.

According to LSEG data, PDD reported total revenue of 106.23 bn yuan (15.67 bn) for the first quarter ended in March. This compares with an average analyst estimate of 109.33 bn yuan.

The net income attributable to ordinary shareholders was 12.5 billion yuan. This is down 15% from the previous year due to higher?research and development?expenses, as well as increased order fulfillment and payment-processing fees.

(source: Reuters)