Trade uncertainty and weak sentiment hit Temu-owner PDD’s Q1 results

PDD Holdings, the Chinese e-commerce giant, missed Wall Street estimates for first-quarter revenue on Tuesday, as its domestic platform Pinduoduo—an online marketplace known for ultra-low prices and group-buying deals—struggled with weak consumer sentiment, and its international arm Temu faced pressure from uncertain global trade policies.

U.S.-listed shares of PDD Holdings fell nearly 7% in premarket trading following the announcement.

Despite aggressive price cuts from retailers and ongoing government stimulus aimed at boosting spending, a prolonged property crisis in the world’s second-largest economy continues to dampen consumer confidence—even on Pinduoduo, a platform that has traditionally outperformed competitors by focusing on low-cost goods.

Both Pinduoduo and Temu rely heavily on PDD’s supplier network in China to offer products at extremely competitive prices. However, shifting trade policy dynamics are beginning to affect that advantage.

PDD reported quarterly revenue of 95.67 billion yuan ($13.30 billion) for the period ended March 31, missing analysts’ average estimate of 102.51 billion yuan, according to data compiled by LSEG.

Earlier this month, the United States reduced tariff rates for goods from China valued at under $800 through the “de minimis” provision—a trade exemption frequently used by Temu to avoid tariffs and maintain its low-price model. However, this may change as international scrutiny of de minimis loopholes intensifies, potentially leading to price hikes for Temu in the future.

PDD’s net income also took a hit, dropping 47% year over year to 14.74 billion yuan, down from 28 billion yuan in the same quarter of 2023.

($1 = 7.1949 Chinese yuan renminbi)

FashionNetwork.com with Reuters