PDD Holdings reported a 47% decline in first-quarter net profit to 14.74 billion yuan ($2.05 billion), citing intense competition in its domestic market and ongoing global trade uncertainty affecting its international operations.
The results prompted a sharp market reaction, with the company’s U.S.-listed shares dropping more than 17%.
The fall in profitability comes despite deep price cuts and government stimulus measures aimed at boosting consumer spending. The company attributed the weaker performance to a lower-than-expected operating margin, which it linked to elevated costs from promotional activities and advertising, as well as the impact of recent U.S. tariff changes.
These strategic investments, while weighing on short-term earnings, are aimed at supporting long-term platform health and merchant performance.
PDD’s domestic platform, Pinduoduo, known for its aggressive low-price model, has outperformed many of its peers, yet the broader Chinese economy continues to struggle with weak consumer confidence amid a protracted property crisis. Meanwhile, the company’s global platform, Temu, is navigating heightened trade tensions, including a recent escalation and temporary de-escalation in tariffs between the U.S. and China.
The U.S. government’s decision to adjust tariff exemptions for goods valued under $800, a key provision leveraged by Temu, has introduced fresh uncertainty.
Despite these headwinds, PDD remains committed to maintaining price stability and improving supply chain operations across regions. The company also reiterated its long-term vision for Temu, highlighting a shift toward greater local merchant fulfillment to mitigate external pressures.
Revenue for the quarter ended March 31 stood at 95.67 billion yuan ($13.30 billion), missing analysts’ expectations of 102.51 billion yuan, according to LSEG data.
