Revenue Misses Market Estimates
PDD Holdings (NASDAQ:PDD) reported disappointing quarterly revenue on Monday, falling short of market expectations. The company’s e-commerce platform, Pinduoduo, struggled due to decreased consumer spending, causing PDD stock to plunge over 25% in early trading. The downturn in consumer spending has been exacerbated by a fragile economy, ongoing weakness in the property sector, and high unemployment rates in China, leading to reduced purchases across the retail and e-commerce sectors.
Increased Competition and Investment Challenges
Despite Pinduoduo’s appeal to cost-conscious consumers with low prices and steep discounts, competitive pressure has intensified as rivals ramp up promotions. PDD has announced plans to invest heavily in improving the platform’s trust and safety features, supporting high-quality merchants, and addressing the challenges posed by low-quality vendors. The company expects revenue growth to face significant pressure from both intensified competition and external economic factors, which may also impact profitability.
In addition to PDD Holdings, other major Chinese e-commerce companies have faced challenges. Alibaba Group Holding Limited (NYSE:BABA) also missed revenue estimates earlier this month due to weaker domestic e-commerce sales, while JD.com, Inc. (NASDAQ:JD) reported a modest 1.2% increase in quarterly revenue.
For the second quarter, PDD reported revenue of 97.06 billion yuan (approximately $13.64 billion), falling short of the analysts’ average estimate of 100 billion yuan. Operating expenses surged by 48% as the company invested in marketing and promotions to attract shoppers, with general and administrative costs more than tripling to 1.84 billion yuan due to increased staff-related expenses.
Featured Image: Megapixl
Author Faith Yakubu 
