China's PDD misses quarterly revenue estimates on softer demand

Chinese e-commerce major PDD Holdings missed market estimates for quarterly revenue on Wednesday, as lingering economic weakness dented demand at the company’s domestic discount marketplace, Pinduoduo.

Shares of the company, which also operates the Temu e-commerce platform internationally, fell more than 5 percent in US premarket trading.

Chinese retailers have been struggling to attract consumers as a prolonged property crisis and concerns about jobs and wage growth have hammered consumer spending power, crimping demand at companies such as PDD.

PDD is also facing stiff competition from rivals JD.com and Alibaba, who have rolled out steep promotions and discounts to lure customers.

Temu, meanwhile, has emerged as a popular platform for shoppers to buy everything from shoes to homeware at low prices, capturing demand from lower-income households globally.

While growth remains strong in many of the markets that Temu operates in, the company’s low-cost model of shipping cheap goods to customers directly from China is also facing growing regulatory scrutiny.

PDD reported total revenue of 106.23 billion yuan (HK$122.7 billion) in the first quarter ended March, compared with analysts’ average estimate of 109.33 billion yuan, according to data compiled by LSEG.

Net income attributable to ordinary shareholders stood at 12.5 billion yuan, down 15 percent from a year earlier, owing to an increase in research and development expenses as well as higher order fulfillment and payment processing fees.

Reuters

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