Chinese e-commerce giant Pinduoduo revenue up 66% in Q2 - PingWest

Chinese e-commerce giant Pinduoduo revenue up 66% in Q2

Chinese e-commerce giant Pinduoduo revenue up 66% in Q2

August 29, 2023 11:27 pm

PDD Holdings reports a strong revenue growth in Q2, beating estimates.

Revenue came in at 52.28 billion yuan ($17.21 billion), up 66% from $31.44 billion in the same period in 2022. Analysts on average expected $43.68 billion, according to Refinitiv.

Earnings per share were $1.44, also beating analysts' expectations of $1.

Shanghai-headquartered PDD Holdings mainly operates two budget shopping apps: Pinduoduo for the domestic market and Temu for overseas consumers.

The global economic downturn has created a great opportunity for PDD Holdings to grow, as consumers are tightening their belts and looking for cheaper products.

In China, Pinduoduo has invested billions of dollars in widely offering coupons during the "618" shopping festival, which runs from late May to mid-June each year, spurring consumer spending.

Temu, fueled by global bargain-seekers, has seen remarkable growth. Since its initial launch in the US in September, the platform has swiftly expanded into numerous markets, including Canada, New Zealand, Australia, Europe, Japan, Southeast Asia, and Latin America.

Recent data from Sensor Tower, a market research firm, revealed that Temu topped the shopping app download charts in the US, Australia, and Germany over the past three months.

However, Temu's rapid rise has put pressure on profit margins. PDD's annual report last year acknowledged the significant resources needed for Temu's growth. Despite the surge in app traffic, Bloomberg Intelligence analysts estimate that Temu contributed to less than 1% of PDD's Q2 sales.

Other industry players have also observed consumers gravitating towards low-priced alternatives. For instance, US-based TJX Companies also reported better-than-expected second-quarter earnings. The operators of off-price retail chain T.J.Maxx said the third quarter was off to a strong start and they saw huge discount buying opportunities in the market.

It's worth noting that Temu is currently embroiled in a legal battle with Shein, a fellow China-based budget shopping platform. Shein has filed a lawsuit against Temu in the US, alleging trademark and copyright violations, along with "deceptive business practices." In a countermove, Temu accuses Shein of breaching antitrust laws through coercive tactics, preventing clothing manufacturers from collaborating with them.