Temu, the Chinese e-commerce giant which has seen a meteoric rise in its popularity in several major markets including Australia, has witnessed the share price of its parent company – PDD Holdings – significantly eroded this week.
The US-listed PDD Holdings shares fell the most on record after it warned that revenue growth will dwindle.
It reported revenue of 97.1 billion yuan (A$20.07 billion) for the June quarter. Net income came to 32 billion yuan (A$6.63 billion).
PDD co-founder Chen Lei warned that PDD’s current trajectory wasn’t sustainable, as it faces increasing competition from the likes of ByteDance’s TikTok and Alibaba who are competing for the same budget-conscious shoppers which Temu targets.
“Competition is here to stay and is expected to intensify in our industry,” Chen told analysts during a post-results briefing, according to Bloomberg. “High revenue growth is not sustainable, and a downward trend in profitability is inevitable.”
It was enough to send PDD’s shares tumbling as its shares fell the most on record. Its share price dropped more than 28 per cent from US$140.5 (A$207.34) at the end of trading on Friday, to US$100 (A$147.58) at the close of trade on Monday.
That move on the market also sent the net worth of Colin Huang, the founder of Temu. Huang’s fortune fell by $14.1 billion (A$20.81 billion), his biggest one-day loss ever.
Huang held the position as China’s richest person for two weeks, before moving to fourth place on Monday.
Huang founded PDD in 2015. The former Google engineer stepped down as PDD’s chief executive in 2020 and left the board as chairman in 2021.
In Australia, Temu along with its competitor Shein have managed to attract millions of Australian customers to their platforms which offer products at rock-bottom prices.
Recent data from Roy Morgan released this month indicates that 3.8 million Australians aged 14+ are buying at least once from Temu over 12 months.
Among customers who have shopped on Shein and Temu in the last 12-month period, the majority are repeat customers – 76 per cent of Shein shoppers and 80 per cent of Temu shoppers bought at least twice over that period from each platform. It estimated that Temu and Shein together had close to $3 billion in annual sales in the 12 months to June 2024, which includes $1.7 billion for Temu and $1.1 billion for Shein.
