PDD, owner of Temu and Pinduoduo, sees sales surge despite China gloom
- Revenue of the Chinese e-commerce giant reached US$7.2 billion in the June quarter, up two-thirds from a year ago
- PDD will outgrow peers as monthly usage of the company’s app is increasing while Temu is expanding to more countries, Morgan Stanley says
PDD Holdings revenue rose a stronger-than-expected 66 per cent after the company behind hit shopping app Temu spent to boost growth at home and abroad to counter a bumpy post-pandemic recovery.
Its shares climbed more than 13 per cent in pre-market trading in New York. The e-commerce platform reported revenue of 52.3 billion yuan (US$7.2 billion) in the June quarter, beating the average estimate of 43.3 billion yuan. Net income increased 47 per cent to 13.1 billion yuan.
PDD’s growth surpassed many of its major Chinese peers and underscores how the company that once trailed far behind Alibaba Group Holding and JD.com has in recent years used promotions and inroads into lower-tier cities to grab market share from more established rivals. It created Temu, featured with much fanfare during this year’s Super Bowl, to try and replicate that success abroad.
Mixed financial results from the country’s online commerce and media leaders have cast doubt over a recovery for the world’s biggest internet arena. This month, Alibaba and JD.com both reported faster-than-anticipated growth for the second quarter while social media giant Tencent Holdings recorded sales and net income that missed analysts’ estimates.
In PDD’s case, increasingly fierce competition in China and aggressive strides overseas may pressure profitability.
