Temu owner PDD sees shares plummet 29% despite strong Q2 results

Temu owner PDD holdings saw its shares plummet 29%, wiping out $55bn (£41.6bn) off the company’s market value, after its Q2 results fell short of analysts expectations.

This comes despite a 86% increase in revenues to $13.35m (£10.09m) and a 156% rise in operating profit to $4.48m (£3.39m) in Q2 2024.

Co-chief executive officer Lei Chen highlighted that the group suffered competition from Bytedance’s TikTok shop, Alibaba Group, and Shein.

However, the group’s revenues from online marketing services and others also increased 29% to $6.75 (£5.10m) and revenues from transaction services increased 234% to $6.59m (£4.98m).

Chen said: “While encouraged by the solid progress we made in the past few quarters, we see many challenges ahead. We are committed to transitioning toward high-quality development and fostering a sustainable ecosystem. We will invest heavily in the platform’s trust and safety, support high-quality merchants, and relentlessly improve the merchant ecosystem. We are prepared to accept short-term sacrifices and potential decline in profitability.”

Jiazhen Zhao, executive director and co-chief executive officer of PDD Holdings, added: “We are committed to nurturing a healthy and sustainable ecosystem where high-quality merchants thrive. We will vigorously support high-quality merchants while firmly tackling low-quality ones, continuously building a healthy and sustainable ecosystem.”

Jun Liu, VP of Finance of PDD Holdings, concluded: “In the past quarter, our revenue growth rate slowed quarter-on-quarter. Looking ahead, revenue growth will inevitably face pressure due to intensified competition and external challenges. Profitability will also likely be impacted as we continue to invest resolutely.”