Pinduoduo owner’s revenue falls short on weak consumer spending

By Chavi Mehta and Casey Hall

(Reuters) -PDD Holdings Inc, which owns discount e-commerce platforms Pinduoduo (NASDAQ:) and Temu, on Monday missed expectations for fourth-quarter revenue as China’s post-re-opening consumer recovery remains patchy.

U.S.-listed shares of PDD Holdings fell 7% in premarket trading.

PDD reported revenue of 39.82 billion yuan ($5.79 billion) for the quarter ended Dec. 31, up 46% year-on-year, but this fell short of estimates for 41.01 billion yuan, based on Refinitiv data.

The group had reported 65% revenue growth in its third- quarter earnings last November.

PDD’s fourth quarter included only the first few weeks of China’s re-opening from its strict zero-COVID rules in December. The company’s revenue growth compares with single-digit gains reported by Chinese competitors Alibaba (NYSE:) and JD (NASDAQ:).com for the same period.

JD.com warned in March that consumer confidence in China would take time to rebuild amid economic uncertainties.

China’s total retail sales contracted 1.8% in December, while the country’s economic growth in 2022 slumped to one of its worst levels in half a century.

Discounting campaigns by rivals have also intensified competition for PDD, which has gained market share since it first came on the scene in 2015 by targeting price-conscious consumers with discounted goods.

PDD’s fast-growing international platform Temu, which was launched in September to U.S. shoppers, sells a variety of goods, from shoes, jewelry, electronics and homewares directly from Chinese merchants.

Temu’s gross merchandise value – the total sales before expenses – increased to $192 million in January from $3 million in September, based on analysis from data company YipitData.

Temu’s 2023 expansion will include roll outs in Canada, Australia, New Zealand and the UK.​

($1 = 6.8799 renminbi)

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