PDD Shares Tumble 17% After Sales, Profit Underwhelm
(Bloomberg) -- PDD Holdings Inc.'s shares fell as much as 17% in premarket trading in the US after its quarterly sales and net profit missed estimates as trade tensions between Beijing and Washington took a toll on its business.
The company reported revenue of 95.7 billion yuan ($13.3 billion), falling shy of the average analyst estimate of 101.6 billion yuan, for the quarter ended March. Net income in the three-month period totaled 14.7 billion yuan, while analysts on average looked for 25.7 billion yuan.
PDD Chairman Chen Lei attributed the disappointing results to economic uncertainties and the company's investment in supporting merchants and consumers.
'These investments weighed on short-term profitability,' Chen said in the earnings statement.
A slowdown in growth rate is expected as PDD faces challenges from its efforts to expand its business, and the trend has seen an acceleration due to 'changes in the external environment,' Vice President of Finance Liu Jun said in the same statement. She added the company's financial results may continue to feel the impact from ongoing investments in its ecosystem.
The company has been warning investors since last year that the company's growth would slow down overtime, but the drop was sharper than anticipated.
Temu operator PDD is grappling with heightened competition domestically and a constantly changing trade environment in the US. While the company has enjoyed significant success with its international foray, growth and its long-term future in the US have been undermined by recent steps by the Trump administration targeting Chinese e-commerce operators.
Washington's move to close the de minimis exception for tariff-free parcels sent to the US pushed Temu to start shipping products in bulk to local warehouses. The Chinese online shopping outlet said it would switch to having US orders fulfilled only by local merchants.
Temu has worked to expand in other markets to reduce dependence on the US, but it's also facing potential regulatory challenges elsewhere. Japan, a major Asian market, is mulling a review of the tax exemptions for small parcels on concerns of fair competition. Meanwhile, the EU is also considering charging a flat fee for those packages, mainly from China.
PDD's earnings comes after its peer JD.com Inc. saw the fastest revenue growth in three years thanks to government stimulus measures to boost purchases. Alibaba Group Holding Ltd. also reported better-than-expected growth in domestic retail, although overall results disappointed.
Beijing has intensified its national trade-in and purchase subsidies that were first launched last year to encourage domestic consumption of products from smartphones to cars. The policy has proven popular among consumers, and the recent progress in talks between Beijing and Washington should also have eased some pressure on China's economy.
What Bloomberg Intelligence Says
Steeper subsidies to help Temu's merchants mitigate cost hikes from higher tariffs and supply chain disruptions probably hurt PDD's earnings after the US-China trade war erupted.
- Catherine Lim and Trini Tan, analysts
Click here for the research.
(Updates throughout with share movement, net income and management comments.)
More stories like this are available on bloomberg.com
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Indian Express
30 minutes ago
- New Indian Express
Global Smartwatch Shipments decline 2% in Q1 2025; Apple leads amid rising Chinese brands
The global smartwatch market saw a 2% year-over-year (YoY) decline in shipments during the first quarter of 2025, signaling a period of stabilization after years of rapid growth. According to the counterpoint research, despite the dip, Apple retained its position as the market leader, capturing 20% of global shipments. It was followed by Huawei with 16% and Xiaomi with 10%, both of which showed significant growth. Apple slips as Chinese brands accelerate Among the top 10 smartwatch brands, Huawei and Xiaomi registered the fastest YoY growth, driven by strong domestic demand and expansion in emerging markets. Apple, on the other hand, experienced a 9% YoY decline, primarily due to waning consumer interest. Industry analysts point to the lack of significant innovations in recent Apple Watch models as a key factor, with many users opting to hold off on upgrades. Apple's market share has also seen notable fluctuations over recent quarters. While it led with 31% share in Q4 2023, its share dropped to 20% in Q1 2025, reflecting a seasonal slowdown and intensifying competition. The 'Others' category — encompassing all non-Apple brands — accounted for 80% of the market in Q1 2025, underscoring the growing diversity of options available to consumers. China emerged as the top contributor to global smartwatch shipments this quarter, accounting for 29% of total volume. The country also recorded the highest YoY shipment growth at 40%, fueled by robust performance from Huawei, BBK (Imoo), and Xiaomi. This surge highlights China's role as both a major manufacturing hub and a fast-growing consumer market for wearables. In North America, High-Level Operating System (HLOS) smartwatches dominated with an 84% share, led by Apple, Samsung, and Garmin. The region continues to favor feature-rich smartwatches over basic fitness trackers, driven by health monitoring and connectivity features. As the smartwatch market matures, brands are expected to focus more on innovation, pricing strategies, and regional customization to sustain growth and consumer Kumar @ New Delhi The global smartwatch market saw a 2% year-over-year (YoY) decline in shipments during the first quarter of 2025, signaling a period of stabilization after years of rapid growth. According to the counterpoint research, despite the dip, Apple retained its position as the market leader, capturing 20% of global shipments. It was followed by Huawei with 16% and Xiaomi with 10%, both of which showed significant growth. Apple slips as Chinese brands accelerate Among the top 10 smartwatch brands, Huawei and Xiaomi registered the fastest YoY growth, driven by strong domestic demand and expansion in emerging markets. Apple, on the other hand, experienced a 9% YoY decline, primarily due to waning consumer interest. Industry analysts point to the lack of significant innovations in recent Apple Watch models as a key factor, with many users opting to hold off on upgrades. Apple's market share has also seen notable fluctuations over recent quarters. While it led with 31% share in Q4 2023, its share dropped to 20% in Q1 2025, reflecting a seasonal slowdown and intensifying competition. The 'Others' category — encompassing all non-Apple brands — accounted for 80% of the market in Q1 2025, underscoring the growing diversity of options available to consumers. China emerged as the top contributor to global smartwatch shipments this quarter, accounting for 29% of total volume. The country also recorded the highest YoY shipment growth at 40%, fueled by robust performance from Huawei, BBK (Imoo), and Xiaomi. This surge highlights China's role as both a major manufacturing hub and a fast-growing consumer market for wearables. In North America, High-Level Operating System (HLOS) smartwatches dominated with an 84% share, led by Apple, Samsung, and Garmin. The region continues to favor feature-rich smartwatches over basic fitness trackers, driven by health monitoring and connectivity features. As the smartwatch market matures, brands are expected to focus more on innovation, pricing strategies, and regional customization to sustain growth and consumer interest.
India Gazette
an hour ago
- India Gazette
Bone-crushing Russia sanctions bill could crush US trade Politico
Washington risks isolating itself from top world economies, including key European allies, according to the outlet The passage of a new US sanctions package on Russia could disrupt America's relationships with its biggest trade partners and isolate it from the world's leading economies, Politico reported on Saturday. The proposed bill includes a steep 500% tariff on imports from any country that continues to buy oil, gas, uranium, or other key commodities from Moscow. Among those most affected would be India and China, which together account for approximately 70% of Russian energy exports. Several other nations that import Russian energy and uranium could also be subject to the bill's penalties. Imposing 500% tariffs on Chinese-made imports would likely trigger a surge in consumer prices, severely disrupt supply chains, and potentially push US unemployment to levels associated with a recession, Politico noted. The sanctions could be described as targeting the US itself since the country continues to rely on enriched uranium imports from Russia for its nuclear power sector. And it could effectively isolate the US from many of the world's leading economies, including its European allies, the article says. US Senator Rand Paul wrote in the publication Responsible Statecraft that the bill "essentially amounts to an embargo" and could trigger "economic calamity on a scale never before seen in our country." He added that such punitive measures are unlikely to change Moscow's core strategic goals and only further entrench the US in a "failing" foreign policy approach. The sanctions bill was introduced in early April by a bipartisan group of senators led by Republican Senator Lindsey Graham and Democratic Senator Richard Blumenthal. In addition to 500% tariffs, the measure includes secondary sanctions targeting countries that maintain commercial ties with Moscow. Graham recently proposed amendments to exempt countries providing military aid to Ukraine from the tariffs. The change would shield the EU, which continues to import gas from Russia. The senator described the bill as "one of the most draconian sanctions bills ever written" and the sanctions as "bone-crushing." Russia has consistently criticized Western sanctions, calling them illegal, and maintains that they have failed to inflict lasting economic damage. In March, Russian President Vladimir Putin said that a total of 28,595 sanctions had been imposed on Russian companies and individuals in recent years - more than the total number on all other countries combined. According to the president, the West sought to eliminate Russia as a competitor, but its economy has only grown more resilient under pressure. (
Economic Times
an hour ago
- Economic Times
China approves some exports of rare earths ahead of US talks
Beijing has approved some rare earth export applications, potentially easing tensions before US-China trade talks. The commerce ministry confirmed the approvals, noting growing demand in robotics and electric vehicles, and will expedite approvals for qualified exporters to Europe. This follows a call between Presidents Trump and Xi, where Trump expressed optimism about resolving trade issues and advancing towards a deal. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Beijing says it granted approval to some applications for the export of rare earths, a move that could ease tensions before trade negotiations between the US and China next Chinese commerce ministry confirmed the approval of the applications without specifying which countries or industries were covered, even as it noted growing demand for the minerals in robotics and electric vehicles. The ministry will continue to review and approve compliant export applications, according to a statement on confirmation comes days after the US and Chinese presidents spoke, following which Donald Trump said that there "should no longer be any questions respecting the complexity of Rare Earth products." Delegations from Beijing and Washington are scheduled to meet in the UK to conduct trade negotiations on granted temporary export licenses to rare-earth suppliers of the top three US automakers, Reuters reported on Friday. The commerce ministry also said earlier Saturday it will speed up approvals for qualified rare earth exporters to comment came one day after a rare call with Xi aimed at resolving trade tensions that have been brewing over the topic for that time, Trump said there had been "a very positive conclusion" to the talks, adding that "there should no longer be any questions respecting the complexity of Rare Earth products.""We're very far advanced on the China deal," Trump told reporters on countries struck an agreement on May 12 in Geneva, Switzerland, to roll back for 90 days most of the triple-digit, tit-for-tat tariffs they had placed on each other since Trump's January inauguration. Financial markets that had worried about trade disruptions rallied on the news.
