PDD Holdings, the Chinese parent company of online shopping platforms Temu and Pinduoduo, reported disappointing sales and profits, as Chinese consumers continued to curb spending amid the ongoing economic slowdown.
Shares of the US-listed e-commerce giant plummeted nearly 11% on Thursday following the news.
This comes after PDD’s key competitors in China, Alibaba and JD.com, also revealed underwhelming results for the September quarter.
China’s consumer confidence has been affected by the property sector crisis and high youth unemployment. For the quarter ending in September, PDD’s revenue reached 99.35 billion yuan ($13.7 billion, £10.9 billion), falling short of analysts’ expectations of approximately 102.8 billion yuan.
This marks the second consecutive quarter of disappointing results for PDD, following years of rapid growth.
“Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges,” said Jun Liu, VP of Finance at PDD Holdings.
While PDD’s Chinese platform, Pinduoduo, became popular for its low-cost and heavily discounted products, increasing competition from rivals adopting similar pricing strategies has sparked a price war.
“China’s retail sector is struggling due to the broader economic slowdown, and consumer confidence has yet to fully recover,” said James Yang, a partner at Bain & Company.
Despite challenges in China, PDD’s global e-commerce platform, Temu, is also facing setbacks abroad.
“There’s uncertainty about potential tariff changes and rising resistance from other countries over its ‘cheap’ pricing model,” said Alicia Yap, an equity research analyst at Citi, ahead of the results.
Last week, Vietnamese authorities announced that Temu and Shein must register with the government by the end of the month, or face a ban.
In October, Indonesia ordered Google and Apple to remove Temu from their app stores in an effort to protect local retailers.
Meanwhile, the EU has launched an investigation into whether Temu facilitated the sale of illegal products, which could result in significant fines.
In the US, President-elect Donald Trump has vowed to raise tariffs on Chinese imports, which could erode Temu’s competitive edge by raising the prices of its super-cheap goods.